Accounting 1
Anything of value that is owned
What is an "asset"?
A record summarizing all the information pertaining to a single item in the accounting equation
What is an "account"?
The difference between personal assets and personal liabilities
What is "personal net worth"?
Planning, recording, analyzing, and interpreting financial information
What is "accounting"?
An equation showing the relationship among assets, liabilities, and owner's equity
What is the "accounting equation"?
A business activity that changes assets, liabilities, or owner's equity
What is a "transaction"?
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"?
A planned process for providing financial information that will be useful to management
What is an "accounting system"?
Assets taken out of a business for the owner's personal use
What are "withdrawals"?
A formal written document that describes the nature of a business and how it will operate
What is a "business plan"?
The standards and rules that accountants follow while recording and reporting financial activities
What is "GAAP"?
The amount remaining after the value of all business liabilities is subtracted from the value of all business assets
What is the "owner's equity"?
A sale for which cash will be received at a later date
What is a "sale on account"?
A business owned by one person
What is a "proprietorship"?
An amount owed by a business
What is a "liability"?
The account used to summarize the owner's equity in the business
What is the "capital account"?
A person or business to whom a liability is owed
What is a "creditor"?
A decrease in owner's equity resulting from the operation of a business
What is an "expense"?
The amount in an account
What is an "account balance"?
An increase in owner's equity resulting from the operation of a business
What is "revenue"?
Financial reports that summarize the financial conditions and operations of a business
What are "financial statements"?
A business that performs an activity for a fee
What is a "service business"?
Financial rights to the assets of a business
What are "equities"?
The name given to an account
What is an "account title"?
The principals of right and wrong that guide an individual in making decisions
What are "ethics"?