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22 terms

Accounting - Chapter 1

Chapter 1
STUDY
PLAY
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 value that is owned
equities
financial rights to the assets of a business
liability
an amount owed by a business
owners 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 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 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