Unit 1 vocab Flashcards
The process of planning, recording, analyzing, and interpreting financial information
accounting
A planned process designed to compile financial data and summarize the results in accounting records and reports
accounting system
Financial reports that summarize the financial condition and operations of a business
financial statement
A formal report that summarize the financial condition and operations of a business
net worth statement
Anything of value that is owned
asset
An amount owed
liability
The difference between personal assets and personal liabilities
personal net worth
The difference between assets and liabilities
equity
The principles of right and wrong that guide an individual in making decisions
ethics
The use of ethics in making business decisions
business ethics
A business that performs an activity for a fee
service business
A business owned by one person
proprietorship
A formal written document that describes the nature of a business and how it will operate
business plan
(Generally Accepted Accounting Principles) The standards and rules that accountants follow while recording and reporting financial activites
GAAP
Financial rights to the assets of a business
equities
The amount remaining after the value of all liabilities is subtracted from the value of all assets
owner’s equity
The equation showing the relationship among assets, liabilities and owner’s equity
accounting equation
Any business activity that changes assets, liabilities, or owner equity
transaction
A record that summarizes all the transactions pertaining to a single item in the accounting equation
account
The name given to an account
account title
The difference between the increases and decreases in an account
account balance
An account used to summarize the owner’s equity in a business
capital account
A person or business to whom a liability is owed
creditor
an increase in equity resulting from the sale of goods or services
revenue
