Chapter 1 Flashcards
Account Form
The form of balance sheet that resembles the basic format of the accounting equation, with assets on the left side and Liabilities and Owner’s Equity sections on the right side.
Account Payable (AP)
The liability created by a purchase on account.
Account Receivable (AR)
A claim against the customer created by selling merchandise or services on credit.
Accounting
An information system that provides reports to stakeholders about the economic activities and condition of a business.
Accounting Equation
Assets = Liabilities + Owner’s Equity.
Assets
The resources owned by a business.
Balance Sheet
A list of the assets, liabilities, and owner’s equity as of a specific date, usually at the close of the last day of a month or a year.
Business
An organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers.
Business Entity Concept
A concept of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.
Business Transaction
An economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations.
Certified Public Accountant (CPA)
Public accountants who have met a state’s education, experience, and examination requirements.
Corporation
A business organized under state or federal statutes as a separate legal entity.
Cost Concept
A concept of accounting that determines the amount initially entered into the accounting records for purchases.
Earnings
Used to describe when revenues exceed expenses. (Also see net income and net profits)
Ethics
Moral principles that guide the conduct of individuals.
