Advanced personal finance Flashcards
The process of planning, recording, analyzing, and interpreting financial information.
Accounting
A planned process designed to compile financial data and summarize the results in accounting records and reports.
Accounting system
Financial reports that summarize the financial condition and operations of a business.
Financial statements
A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
Net Worth statement
Anything of value that is owned.
Asset
An amount owed.
Liability
The difference between personal assets and personal liabilities.
Personal Net Worth
The difference between assets and liabilities.
Equity
The principles of right and wrong that guide an individual in making decisions
Ethics
The use of ethics in making business decisions.
business ethics
A business that performs an activity for a fee.
Service bussiness
A business owned by one person.
proprietorship
A formal written document that describes the nature of a business and how it will operate.
Business Plan
Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities.
GAAP
Financial rights to the assets of a business.
equities
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
Owner’s Equity
The equation showing the relationship among assets, liabilities, and owner’s equity.
Accounting equation
. Any business activity that changes assets, liabilities, or owner’s equity.
Transaction
. A record that summarizes all the transactions pertaining to a single item in the accounting equation.
Account
The name given to an account.
Account Title
The difference between the increases and decreases in an account.
Account Balance
An account used to summarize the owner’s equity in a business.
Capital Account
A person or business to whom a liability is owed.
Creditor
