Definitions
financial reports that summarize the financial condition and operations of a business
financial statements
Any business activity that changes assets, liabilities, or owner’s equity
transaction
Something of value
Asset
Accounting is often referred to as this language
Business
the number of accounts affected with every transaction
2
A record that summarizes all the transactions pertaining to a single item in the accounting equation is called an...
Account
Any time a business spends money, receives money, or owes money, it is engaged in
business activity
Something that is owed
Liability
An increase in Equity resulting from the sale of goods or services
revenue
You buy supplies on account. The accounts affected are...?
Which increases or decreases?
supplies increase and accounts payable increase
In accounting, this is referred to as GAAP
Generally Accepted Accounting Principles
An account used to summarize the owner’s equity in a business is called a
capital account
What is the Accounting Equation and what are the 2 ways of representing it?
A = L + E
A - L = E
An __________ is the cost of goods or services used to operate a business
expense
How does Revenue change Capital?
How does an Expense change Capital?
How does a Withdrawal change Capital?
Increase, Decrease, Decrease
difference between the increases and decreases in an account
account balance
A person or business to whom a liability is owed is called a
creditor
Whenever you record a transaction, how many things does Mr. Miller say to always remember and what is the last one?
4 - always make sure the accounting equation balances
Assets taken from the business for the owner’s personal use is called a
withdrawal
You sell services on account. The accounts affected are? What is increasing or decreasing?
accounts receivable increases and capital (revenue) increases
a planned process designed to compile financial data and summarize the results in accounting records and reports
Accounting System
the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers
accounts receivable
When you engage in a common business practice to buy items and pay at a future date, this is called buying on _________.
account
You receive cash on account. The accounts affected are? What is increasing or decreasing?
cash increases, accounts receivable decreases