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Accounting > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What is Accounting?

A

the process of planning, recording, analyzing, and interpreting financial info.

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2
Q

What is an accounting system?

A

a planned process designed to compile financial data and summarize the results in accounting records and reports.

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3
Q

What is a net worth statement?

A

allows the person extending the loan to see the financial position of a borrower on specific date and make a lending decision.

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4
Q

What is an an asset?

A

anything of value that is owned

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5
Q

What is a liability?

A

an amount owed

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6
Q

What is personal net worth?

A

the difference between personal assets and personal liabilities

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7
Q

Net worth is also called?

A

equity

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8
Q

What is equity?

A

the difference between assets and liability

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9
Q

What is ethics?

A

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

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10
Q

What is business ethics?

A

the use of ethics in making business decisions

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11
Q

What is a service business?

A

a business that performs an activity for a fee

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12
Q

What is a proprietorship?

A

a business owned by one person

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13
Q

A proprietorship is sometimes referred to as a?

A

sole proprietorship

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14
Q

What is a business plan?

A

a formal written document that describes how a business will operate

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15
Q

The standards and rules that accountants follow while recording and reporting financial activities are commonly referred to as?

A

Generally accepted accounting principles or GAAP

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16
Q

What are equites?

A

financial rights to the assets of a business

17
Q

What is owners equity?

A

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

18
Q

What is the accounting equation?

A

the equation showing the relationship among assets, liabilities, and owners’ equity

19
Q

What is an account?

A

a record that summarizes all the transactions pertaining to a single item in the accounting equation

20
Q

What is an account title?

A

the name given to an account

21
Q

What is an account balance?

A

the difference between the increases and decreases in an account

22
Q

What is a capital account?

A

an account used to summarize the owners’ equity in a business

23
Q

What is revenue?

A

an increase in equity resulting from the sale of goods or services

24
Q

What is a sale on account?

A

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

25
Q

What is a expense?

A

the cost of goods or services used to operate a business

26
Q

What is a withdrawal?

A

assets taken from the business for the owner’s personal use

Accounting (8 decks)

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