Chapter 1 Flashcards
Accounting system
A planned process for providing financial information that will be useful to management.
Accounting
Planning, recording, analyzing, and interpreting financial information.
Accounting records
Organized summaries of a business’s financial activities.
Financial statements
Reports that summarize the financial condition and operations of a business
Service business
A business that performs an activity for a fee
Proprietorship
A business owned by a single person
Asset
Anything of value that is owned
Equities
Financial rights to the assets of a business
Liability
Any amount owed by a business
Owner’s equity
The amount remaining after the value of liabilities is subtracted from the value of all assets.
Accounting equation
An equation that shows the relationship among assets, liabilities, and owner’s equity
Assets=Liability+ Owner’s Equity
Ethics.
The principals that guide an individual in making decisions.
Business ethics
The use of ethics in making business decisions.
Transaction
A business activity that changes assets, liabilities, or owner’s equity.
Account
A record summarizing all the information pertaining to a single item in the accounting equation.
