Vocabulary
What is a service business? Give an example
A business that provides customers with a service
Ex. Hair salon, landscapers, car wash
An amount that is owed or the cost of goods or services used to operate a business
Expenses
A group of accounts needed to prepare financial statements
General ledger
The amount remaining after the value of all liabilities is subtracted from the value of all assets
Owner's equity
What is a proprietorship?
A business owned by one person
What is an account that is used to summarize the owner's equity in a business?
A capital account
A list of account titles and numbers showing the location of each account in a ledger
Chart of accounts
What part of the accounting equation does a withdrawal decrease from?
Owners Equity
What is a net worth statement?
- Shows the financial position of a borrower
- What an individual owns minus what they owe
What two parts of the accounting equation are affected when someone buys supplies on account?
Supples (assets) and liabilities
The 5 general ledger divisions are owner's equity, expenses, liabilities, revenue, and assets. What order would you put them in when putting them in the ledger?
1. Assets
2. Liabilities
3. Owner's equity
4. Revenue
5. Expenses
True or false:
An increase in equity (revenue) from the sale of goods or services does not affect owners equity
False