Definitions
What is Accounting?
The process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties
Serena Hamilton, owner, made an investment of cash to the business
Debit => Cash
Credit => S.H. Capital
What is Worksheet
A form used to gather all data needed at the end of an accounting period to prepare financial statements
What is Sole proprietorship
A business entity owned by one person, who is legally responsible for the debts and taxes of the business
What is Book Value
That portion of an asset’s original cost that has not yet been depreciated
What is a Corporation?
A publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business
The business purchased equipment for cash
Debit => Equipment
Credit => Cash
What is Balance Sheet
A formal report of a business's financial condition on a certain date. Includes assets, liabilities and owners' equity.
What is Accounts Payable
Amounts a business must pay in the future
What is Depreciation
Allocation of the cost of a long-term asset to operations during its expected useful life
What is Economic Entity?
A business or organization whose major purpose is to produce a profit for its owners
The business purchased a computer on credit
Debit => Equipment
Credit = > Accounts Payable
What is Income Statement
A formal report of business operations covering a specific period of time
What is Accounts Receivable
Claims for future collection from customers
What is Withdrawals
Funds taken from the business for personal use
What is Internal Control?
A company’s policies and procedures to safeguard assets, ensure reliability of accounting data, and promote compliance with management policies and applicable laws
The business performed a service, client will pay later
Debit => Accounts Receivable
Credit => Revenue
What is a Statement of Owners' Equity
A formal report of changes that occurred in the owner's financial interest during a reporting period
What is Assets
Property owned by a business
Business Transaction
A financial event that changes the resources of a firm
What is Partnership?
A business entity owned by two or more people who carry on a business for profit and who are legally responsible for the debts and taxes of the business
The owner paid the month rent
Debit => Rent Expense
Credit => Cash
What is Trial Balance
A statement to test the accuracy of total debits and credits after transactions have been recorded
What is Expense
An outflow of cash, use of other assets, or incurring of a liability
General Journal
A financial record for entering all types of business transactions; a record of original entry