19 terms

Accounting Chapter 3

STUDY
PLAY
Property
Items of value that are owned or controlled by a business.
Property Rights
Creditors' and owners' financial claims to the assets of a business.
Financial Claims
Legal rights to an item.
Credit
An agreement to pay for a purchase at a later time.
Creditor
A person or business that has a claim to the assets of a business.
Assets
Property or items of value owned by a business.
Investments
Those assetsowned by a business but not used in the operation of the business.
Equity
The total financial claims to the assets, or property, of a business.
Owner's Equity
Owner's claims to the assets of the business.
Liabilities
Amounts owed to creditors; the claims of creditors to the assets of the business.
Accounting Equation
The basis for keeping all accounting records in balance. Assets=Liabilities+Owners Equity.
Business Transaction
A business event, such asthe buying, selling, or exchange of goods, that causes a change in the assets, liabilities, or owners equity of a business.
Account
Subdivision under the three sections of the accounting equation used to summarize increases and decreases in assets, liabilities, and owners equity.
Accounts Receivable
The total amount of money owed to a business.
Accounts Payable
The amount of money owed, or payable, to the creditors of a business.
On Account
When a business or individual buys an item on credit.
Revenue
Income earned from the sale of goods and services.
Expense
The cost of the goods or services that are used to operate a business; expenses decrease owners equity.
Withdrawl
The removal of cash or another asset from the business by the owner for personal use.