Chapter 1

Definitions

100

financial reports that summarize the financial condition and operations of a business

financial statements

200

A record that summarizes all the transactions pertaining to a single item in the accounting equation is called an...

Account

300

In accounting, this is referred to as GAAP

Generally Accepted Accounting Principles

400

difference between the increases and decreases in an account

account balance

500

a planned process designed to compile financial data and summarize the results in accounting records and reports

Accounting System

Definitions 2

100

Any business activity that changes assets, liabilities, or owner’s equity

transaction

200

Any time a business spends money, receives money, or owes money, it is engaged in

business activity

300

An account used to summarize the owner’s equity in a business is called a

capital account

400

A person or business to whom a liability is owed is called a

creditor

500

the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers

accounts receivable

Foundations

100

Something of value

Asset

200

Something that is owed

Liability

300

What is the Accounting Equation and what are the 2 ways of representing it?

A = L + E

A - L = E

400

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

Is this on the test?

100

Accounting is often referred to as this language

Business

200

An increase in Equity resulting from the sale of goods or services

revenue

300

An __________ is the cost of goods or services used to operate a business

expense

400

Assets taken from the business for the owner’s personal use is called a

withdrawal

500

When you engage in a common business practice to buy items and pay at a future date, this is called buying on _________.

account

Transactions

100

the number of accounts affected with every transaction

2

200

You buy supplies on account. The accounts affected are...?

Which increases or decreases?

supplies increase and accounts payable increase

300

How does Revenue change Capital?

How does an Expense change Capital?

How does a Withdrawal change Capital?

Increase, Decrease, Decrease

400

You sell services on account. The accounts affected are? What is increasing or decreasing?

accounts receivable increases and capital (revenue) increases

500

You receive cash on account. The accounts affected are? What is increasing or decreasing?

cash increases, accounts receivable decreases