vocab #1 Flashcards
ethics
the principles of right and wrong that guide an individual in making decisions
equity
is defined as the diff. btwn assets and liability
equities
financial rights to the assets a business
creditor
a person or business to whom a liability is owed.
capital account
an account used to summarize the owner’s equity in a business
business plan
is a formal written document that describes the nature of a business and how it will operate
business ethics
the use of ethics in making a business decisions
asset
anything of value that is owned
liability
an amount owed
GAAP
helps ensure that all companies follow the same set of guidelines and practices when reporting financial data
financial statements
financial reports that summarize the financial condition and operations of a business
expense
the cost of goods or services used to operate a business (unlike a liability)
net worth statements
a formal report that shows what an idviual owns, what an individual owes, and the diff. between the two.
owners equity
the amount remaining after the value of all the liabilities Is subtracted from the value of all assets
accounting system
is a planned process designed to compile financial data and summarize the results in accounting records and reports.
accounting equation
the equation showing the relationship among assets, liabilities, and owners equity.
accounting
is the process of planning, recording, analyzing, and interpreting financial info.
account title
the name given to an account
account balance
the diff. btwn the increases and decreases in an account
account
a record that summarizes all the transaction pertaining to a single item in the accounting equation
proprietorship
is a business owned by one person
revenue
an increase in equity resulting from the sale of goods and services
sale on account
a sale for which a payment will be received @ a later date
service business
a business that preforms an activity for a fee
transaction
accountants call any business activity that changes assets, liabilities and owner’s equity
withdrawals
assets taken form the business for the owners personal use
personal net worth
the diff. btwn. personal assets and personal liabilities
