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Chapter 3
| Term | Definition |
|---|---|
| property | anything of value that a business or person owns and therefore controls |
| financial claim | legal right to an item |
| credit | an agreement to pay for a purchase at a later time; an entry on the right side of an account |
| creditor | a person or business to whom money is owed |
| assets | property or items of value owned by a business |
| equities | the total financial claims to the assets of a business |
| owner's equity | the owner's claim to the assets of a business |
| liabilities | amounts owed to creditors; the claims of creditors to the assets of a business |
| accounting equation | the accounting relationship between assets and the two types of equities Assets = Liabilities + Owner's Equity |
| business transaction | an economic event that causes a change-either an increase or a decrease-in assets, liabilities, or owner's equity |
| account | a subdivision under assets, liabilities, or owner's equity that summarizes the changes and shows the balance for a specific item |
| accounts receivable | 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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