Accounting chapter 1

27 terms by BrookeDeegan

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Accounting

Planning, recording, analyzing, and interpreting financial information

accounting system

A planned process for providing financial information that will be useful to management

accounting records

Organized summaries of a business's financial activities

financial statements

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

service business

A business that performs an activity for a fee

proprietorship

A business owned by one person

asset

Anything of the value that is owned

equities

Financial rights to the assets of a business

liability

An amount owed by a business

owner's equity

The amount remaining after the value of all liabilities is subtracted from the value of all assets

accounting equation

An equation showing the relationship among assets, liabilities, and owners equity

ethics

The principles of right and wrong that guide an individual in making decisions

business ethics

The use of ethics in making business decisions

transaction

A business activity that changes assets, liabilities, or owner's equity

account

A record summarizing all the information pertaining to a single item in the equation

account title

The name given to the account

account balance

The amount in an account

capital

The account used to summarize the owner's equity in a business

revenue

An increase in owner's equity resulting from the operation of a business

sale on account

A sale for which cash will be received at a later date

expense

A decrease in owner's equity resulting from the operation of a business

withdrawals

Assets taken out of a business for the owner's personal use

T account

An accounting device used to analyze transactions

debit

An amount recorded on the left side

credit

An amount recorded on the right side

normal balance

The side of the account that is increased

chart of accounts

A list of accounts used by a business

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