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Accoounting
Chapter 3
| Term | Definition |
|---|---|
| Property | Anything of value that a person or business owns and therefore controls |
| Financial Claim | A legal right to an item |
| Credit | When you buy something and agree to pay for it later |
| Creditor | The business or person selling you the item on credit |
| Assets | Property or items of value owned by a business |
| Equities | |
| Owner's Equity | The owner's claims to the assets of the business |
| Liabilities | The creditor's claims to the assets of the business |
| Accounting Equation | ASSETS = LIABILITIES + OWNER'S EQUITY |
| Business Transaction | An economic event that causes a change- either an increase or decrease- in assets, liabilities, or owner's equity |
| Account | a subdivision under assets, liabilities, or owner's equity |
| Accounts Receivable | The total amount of money owed to a business- money to be received later because of the sale of goods or services on credit |
| Accounts Payable | The amount owed, or payable, to the creditors of a business |
| Investment | Money or other property paid out in order to produce profit |
| On Account | When a business buys an item on credit |
| Revenue | Income earned from the sale of goods or services |
| Expense | The cost of products or services used to operate a business |
| Withdrawl |
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