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Accounting 1
| Term | Definition |
|---|---|
| Account | Is a separate record used to summarize changes in each asset, liability and owner equity of business |
| Business entity | Items that are owned by a business and will provide future benefits. |
| Assets | Items that are owned by a business and will provide future benefits. |
| Accounts receivable | Amount owed to the business by its customers. |
| Liabilities | Something owed to another business entity, debits or obligations of the business than be paid with cash, goods or service. |
| Accounts payable | An unwritten promise to pay a supplier for assets purchased or services received. (Purchased on account or on credit). Formal written note: promises to pay suppliers or lenders sums of money at a definite future times are known as Notes Payable. |
| Owners equity Net worth and Capital | The amount by which the business assets exceed the business liabilities. If there are no business liabilities the owners equity is equal to total assets |
| Accounting equation | The relationship between the three basic accounting elements. Asset=Liabilities+Owners equity |
| Business Transaction | An economic event that has a direct impact on the business. |
| Account titles | Provide a description of a particular type of asset, liability or owners equity affected by a transaction. |
| Business Equity Concept | Concept that non-business assets and liabilities are not included in the business records. |
| Business Equity | An individual, association or organization that engages in economic activities and controls specific economic resources. |
| Corporation | A type of ownership structure in which stockholders own the business. |
| Expenses | The cost of doing business. Costs incurred for the purpose of earning revenue. |
| GAAP | Generally Accepted Accounting Principles. Procedures and guidelines developed by FASB to be followed in the accounting and reporting process. |
| Income statement | Reports revenue, expenses and net income or net loss. |
| Balance sheet | Reports assets, liabilities, and owner's equity on a specific date. Confirms that the accounting equation is in balance. |
| Manufacturing Business | A business that makes a product to sell. |
| Merchandising Business | A business that buys products to sell. |
| Net Income (Profit) | Excess of total revenues over total expenses. Revenues are greater than expenses. |
| Owner's name, Drawing | Withdrawals by the owner that reduce capital by withdrawing cash or other assets for personal use. |
| Owners equity (Capital) | The amount by which business assets are greater than liabilities. |
| Account Balance | The balance shows the ending amount in an account. This is the difference between debits and credits. If the cash account totals $1000 in debits and $400 in credits at the end of an accounting period, the difference is a $600 debit balance. |
| Account Balance | The amount of money in a financial repository such as a checking account at any given moment. |
| Chart of accounts | Is a list of all accounts used by a business. |
Created by:
bvanderhoofmedina
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