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accounting chapter 1
changes the affect of the accounting equation
Term | Definition |
---|---|
Accounting | Planning, recording, analyzing , and interpreting financial information |
Accounting system | A plan process for providing financial information that will be useful to management |
accounting record | 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 by a business |
Owner's equity | the amount remaining after the value of all liabilities is substracted from the value of all assets |
Accounting equation | an equation showing the relationship among assets, liabilities, and owner's equity |
Transaction | a business activity that changes assets, liabilities, and 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 business for the owner's personal use |
ethics | the principles of right and wrong that guide an individual in making decisions |
business ethics | the use of ethics in making business decisions |