Ch. 1 & 2 Accounting Terms

Question 1

planning, recording, analyzing, and interpreting financial information

Answer 1

accounting

Question 2

a planned process for providing financial information that will be useful to management

Answer 2

accounting system

Question 3

organized summaries of a business’s financial activities

Answer 3

accounting records

Question 4

financial reports that summarize the financial condition and operations of a business

Answer 4

financial statements

Question 5

a business that preforms an activity for a fee

Answer 5

service business

Question 6

a business owned by one person

Answer 6

proprietorship

Question 7

anything of value that is owned

Answer 7

asset

Question 8

financial rights to the assets of a business

Answer 8

equities

Question 9

an amount owed by a business

Answer 9

liability

Question 10

the amount remaining after the value of all liabilities is subtracted from the value of all assets

Answer 10

owner’s equity

Question 11

an equation showing the relationship among assets, liabilities, and owner’s equity

Answer 11

accounting equation

Question 12

the principles of right and wrong that guide an individual in making decisions

Answer 12

ethics

Question 13

the use of ethics in making business decisions

Answer 13

business ethics

Question 14

a business activity that changes assets, liabilities, or owner’s equity

Answer 14

transaction

Question 15

a record summarizing all the information pertaining to a singe item in the accounting equation

Answer 15

account

Question 16

the name given to an account

Answer 16

account title

Question 17

the amount in an account

Answer 17

account balance

Question 18

the account used to summarize the owner’s equity in a business

Answer 18

capital

Question 19

an increase in owner’s equity resulting from the operation of a business

Answer 19

revenue

Question 20

a sale for which cash will be received at a later date

Answer 20

sale on account

Question 21

a decrease in owner’s equity resulting from the operation of a business

Answer 21

expense

Question 22

assets taken out of a business for the owner’s personal use

Answer 22

withdrawals