20 terms

Accounting 1 Chapter 1

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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
Service Business
A business that performs an activity for a fee
Proprietorship
A business owned by one person
Financial Statements
Financial reports that summarize the financial condition and operations of a business
Asset
anything of value that is owned
Equities
Financial rights to the assets of a business
Liability
An amount owed to 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
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 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 from the operation of a business.
Withdrawls
Assets taken out of a business for the owner's personal use.
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