CH 1 Changes That Affect The Accounting Equation

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 & operations of a business.

Answer 4

Financial Statements

Question 5

A business that performs 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

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

Answer 12

Transaction

Question 13

A record summarizing all the information pertaining to a single item in the accounting equation.

Answer 13

Account

Question 14

The name given to an account.

Answer 14

Account Title

Question 15

The amount in an account.

Answer 15

Account Balance

Question 16

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

Answer 16

Capital

Question 17

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

Answer 17

Revenue

Question 18

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

Answer 18

Sale On Account

Question 19

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

Answer 19

Expense

Question 20

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

Answer 20

Withdrawals

Question 21

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

Answer 21

Ethics

Question 22

The use of ethics in making business decisions.

Answer 22

Business Ethics