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2.1
Accounting
| Term | Definition |
|---|---|
| Free Enterprise System | A system in which individuals are free to produce the goods and services they choose |
| Profit | The amount earned above the amount of expense incurred to keep the business operating |
| Loss | The result when a business spends more money than it earns |
| Entreprenuer | A person who transfers ideas for products or services into real-world business |
| Capital | Money supplied by investors, banks, or owners of a business |
| Service Business | A business that provides a needed service for free |
| Merchandising Business | A business that buys finished goods and resells them to individuals or other businesses |
| Manufacturing Business | A business that buys raw materials and transforms them into finished products by using labor and machinery |
| Sole Proprietorship | A business owned by one person |
| Partnership | A business owned by two or more person, called partners, who agree to operate the business as co-workers |
| Corporation | A business organization recognized by law to have a life of its own |
| Charter | The legal permission, granted by a state, that gives a corporation certain rights and privileges and spells out the rules under which the corporation is operate |
| Accounting Sytem | A system designed to collect, document, and report on business transactions |
| Manual Accounting System | A type of accounting system in which information is processed by hand |
| Computerized Accounting System | A type of accounting system in which information is recorded by entering it into a computer |
| GAAP | The set rules that all accountants use to prepare financial reports |
| Financial Reports | Documents that present summarized information about the financial status of business |
| Financial Accounting | The type of accounting that focuses on reporting information to external users |
| Management Accounting | The type of accounting that focuses on reporting information to management; often referred to as accounting for internal users of accounting information |
| Business Entity | The accounting assumption that a business exists independently of its owners personal holdings. The accounting records and reports are maintained separatly and contain financial information related only to the business |
| Accounting Period | The period of time covered by an accounting report |
| Going Concern | The accounting assumption that a business is expected to operate indefinitely |
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