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Chapter 3
Accounting
| Term | Definition |
|---|---|
| Property | is anything of value that a person or business owns and therefore controls |
| Financial claim | is 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 |
| Assests | property or items of value owned by a business |
| Equities | accounting term for the financial claims |
| Owners equity | the owners claims to the assets of the business |
| Liabilities | Amounts owed to creditors; the claims of creditors to assets of a business |
| Accounting equation | the relationship between assets and the two types of equities (liabilities and owners equity) |
| Business transaction | An economic event that causes a change - either an increase or decrease- in assets, liabilities, owner's equity |
| Account | A subdivision under assets, liabilities, or owner's equity that summarizes the changes and shows the balance for a specific term |
| Accounts Recievable | The amount of money owed to a business by its credit customers |
| Accounts Payable | The amount of money owed, or payable, to the creditors of a business |
| Investment | Money or other property provided for the purpose of making a profit |
| On Account | The purchase of an item on credit |
| Revenue | Income earned from the sale of goods and services |
| Expense | The cost of goods or services used to operate a business |
| Withdrawal | The removal of cash or another asset from the business by the owner for personal use |
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