Accounting Vocab and Important Information from Chap. 1
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| Flap 2 |
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| Accounting |
A record summarizing all the information pertaining to a single item in the accounting equation. |
| 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 and 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. |
| Owner's 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, 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. |
| Acount Balance |
The amount in an account. |
| Capital |
The account used to summaraize the owner's equity in a business. |
| Revenue |
An increase in owner's equity resulting from the operation of a business. |
| Sales 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. |
| Withdrawals |
Assets taken out of a business for the owner's personal use. |
| What is the Acounting Equation? |
A=L+OE (Assets = Liabilities+Owner's Equity) |
| What acronym do you use to remember what accounting is? |
PRAI (Planning, Recording, Analyzing, and Interpreting) |
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