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Chapter 2
Key Terms
| Term | Definition |
|---|---|
| accounting period | period of time covered by an accounting report |
| accounting system | system designed to collect, document, and report on the financial transactions affecting a business |
| business entity | the accounting assumption that a business exists independently of its owner's personal belongings; accounting records and reports are maintained separately |
| capital | money that investors, banks, or business owners supply |
| charter | legal permission from the state to form a corporation |
| computerized accounting system | system wherein financial information is documented electronially |
| corporation | business with legal permission to form via charter; a complex form of business with many owners |
| entrepeneur | person who transforms ideas for products or services into real-world businesses |
| financial accounting | accounting form wherein financial information is reported to external users |
| free enterprise system | system wherein people are free to produce the goods and services they choose |
| GAAP | the "Generally Accepted Accounting Principles," a methodology devised by the Financial Accounting Standards Board (FASB) |
| going concern | the accounting assumption that a business is expected to operate indefinitely |
| loss | state wherein a business spends more than it makes |
| management accounting | accounting form wherein one reports financial information to the management of the business |
| manual accounting system | system wherein accounting information is processed by hand |
| manufacturing business | business that buys raw materials, uses labor and machinery to transform them into finished products, and sells the finished products to individuals or other businesses. |
| merchandising business | business that buys finished products and resells them to individuals or other businesses |
| partnership | business owned by 2+ people, called partners, who agree to operate the business a co-owners, via written contract |
| profit | amount of money earned over and above the amount spent to keep the business operating |
| service business | business that provides a needed service for a fee |
| sole proprietorship | a business owned by one person |
| financial report | document summarizing information about the financial status of a business |
Created by:
talenswan1
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