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Chapter 1 Vocab

Terms in this set (22)

Accounting
Planning, 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 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
Assets = Liabilities + Owner's 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 accounting equation.
Account Title
The name given to an account.
Account Balance
The up to date amount in an account.
Capital
The account used to summarize owner's equity.
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. Also known as a charge sale.
Expense
A decrease in owner's equity resulting from the operations of a business.
Withdrawal
Assets taken out of the business for the owner's personal use. It is a decrease to owner's equity.
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