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Chapter 3
Key Terms
| Term | Definition |
|---|---|
| property | anything of value a person owns and therefore controls |
| financial claim | a legal right to an item |
| credit | an agreement to pay for a purchase a a later time; an entry on the right side of an account |
| creditor | a business or person to whom money is owed |
| assets | property or items of value owned by a business |
| equities | total financial claims to the assets of a business |
| owner's equity | owner's claim to the assets of the business |
| liabilities | creditor's claims to the assets of the business |
| accounting equation | ASSETS = LIABILITIES + OWNER'S EQUITIES |
| business transaction | an economic event that causes a change in assets, liabilities, or owner's equity. |
| account | subdivision under assets, liabilities, or owner's equity that summarizes the changes and shows the balance for a specific item |
| Accounts Receivable | total amount owed to a business |
| Accounts Payable | amount owed to the creditors of a business |
| investment | money or other property paid out in order to produce a profit |
| on account | the purchase of an item on credit |
| revenue | income earned from the sale of goods or services |
| expense | cost of products of services used to operate a business |
| withdrawal | the removal of cash or another asset from the business by the owner for personal use |
Created by:
talenswan1
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