Terms
A record that summarizes all the transactions pertaining to a single item on the accounting equation.
What is an account
The process of planning, recording, analyzing, and interpreting financial information.
What is accounting
A planned process designed to compile financial data and summarize the results in accounting records and reports.
What is the accounting system
Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities.
What is GAAP
An amount owed
What is a liability
The difference between the increases and decreases in an account.
Anything of value that is owned.
What is an asset
A person or business to whom a liability is owed. OR The account to whom a liability is owed.
What is a creditor OR Accounts Payable
An increase in equity resulting from the sale of goods or services.
What is revenue
The difference between personal assets and personal liabilities.
What is personal net worth
The name given to an account.
What is an account title
The use of ethics in making business decisions.
What is business ethics
Someone who owns, operates, and takes the risk of a business venture.
What is an entrepreneur
A business that performs an activity for a fee.
What is a service business
The cost of goods or services used to operate a business.
What is an expense
An equation showing the relationship among assets, liabilities, and owner’s equity.
What is the accounting equation
The difference between assets and liabilities.
What is equity
A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
What is a net worth Statement
Any business activity that changes assets, liabilities, or owner’s equity.
What is a transaction
A formal written document that describes the nature of a business and how it will operate.
What is a business plan
An account used to summarize the owner’s equity in a business. (Hint: it is listed after the owner's name)
What is capital account
Financial reports that summarize the financial condition and operations of a business.
What are financial statements
Assets taken from the business for the owner’s personal use.
What is a withdrawl
Interest paid on an original amount deposited in a bank plus any interest that has been paid.
What is compound interest
Financial rights to the assets of a business.
What are equities