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12 terms

ACCOUNTING EQUATION

KEYS TO UNDERSTANDING FINANCIAL REPORTS
STUDY
PLAY
ACCOUNTING EQUATION
An equation showing the relationship among assets, liabilities, and owner's equity
ACCOUNTS PAYABLE
Money an organization owes its vendors and suppliers.
ACCOUNTING SYSTEM
a planned process for providing financial information that will be useful to management.
ACCOUNT TITLES
A name given to each item exchanged
ASSETS
property or items of value owned by a business, Resources a business owns or controls that are expected to provide current and future benefits to the business.
FUNDAMENTAL ACCOUNTING EQUATION
Assets = Liabilities + Owner's Equity
HISTORICAL COST
the actual amount paid for merchandise or other items bought is recorded
LIABILITIES
The amounts a BUSINESS owes to a CREDITOR
NOTES PAYABLE
Short-term or long-term liabilities that a business promises to repay by a certain date.
OWNERS EQUITY
the amount remaining after the value of all liabilities is subtracted from the value of all assets.
REVENUES
funds that flow into a business from the sale of goods or services
SEPARATE ENTITY ASSUMPTION
Activities of the business are separate form activities of the owners.