Key Terms 1
Anything owned that is of value
Asset
An amount owed
Liability
The amount remaining after the value of all liabilities are subtracted from the value of all the assets
Owner's Equity
Ab increase in equity resulting from the sale of goods or services
Revenue
Decreases in an asset account are shown on which side of a T Account
Right Side (Credit Side)
The process of planning, recording, analyzing, and interpreting financial information.
Accounting
The principles of right and wrong that guide an individual in decision making
Ethics
A business owned by one person
Proprietorship
Assets taken from the business for the owner's personal use
Withdrawal
Increase in a revenue account are shown on which side of a T account
Right side (Credit side)
Financial reports that summarize the financial condition and operations of a business.
Financial Statements
The difference between personal assets and personal liabilities
Personal net worth
The standards and rules that accountants follow while recording and reporting financial activities
GAAP
A sale for which payment will be received at a later date
Sale on Account
The normal balance side of any expense account
Left Side (Debit Side)
A formal report that shows what a individual owns, what an individual owes, and the difference between the two.
Net Worth Statement
The use of ethics in making business decisions
Business Ethics
Any business activity that changes assets, liabilities, or owner's equity
Transaction
The cost of goods or services used to operate a business
Expense
Decrease in any liability account are shown on which side
Left side (Debit side)
A planned process designed to compile financial data and summarize the results in accounting records and reports.
Accounting System
The difference between assets and liabilities
Equity
The equation showing the relationship among assets, liabilities, and owner's equity
Accounting Equation
An amount recorded on the left side of an account
Normal Balance
Debits must equal credits in what transactions
All transactions