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Accounting
Study the words and definitions for terms used in accounting.
Term | Definition |
---|---|
Accounting | The process of planning, recording, analyzing and interpreting financial information. |
Accounting System | A planned process designed to compile financial data and summarize the results in accounting records and reports. |
Financial Statements | Financial reports that summarize the financial condition and operations of a business |
Net Worth Statements | A formal report that shows what an individual owns, what an individual owes, and the differences between the two. |
Asset | Anything of value that is owned. |
Liability | An amount owed. |
Personal Net Worth | The differences between personal assets and personal liabilities. |
Equity | The difference between assets and liabilities. |
Ethics | The principles of right and wrong that guide an individual in making decisions. |
Business Ethics | The use of ethics in making business decisions. |
Service Business | A business that performs an activity for a fee. |
Proprietorship | A business owned by one person. |
Business Plan | A formal written document that describes the nature of a business and how it will operate. |
GAAP | Generally accepted accounting principles. The standards and rules that accountants follow while recording and reporting financial activities. |
Equities | Financial rights to the assets of a business. |
Owner's Equity | The amount remaining after the value of all liabilities is subtracted from the value of all assets. |
Accounting Equation | An equation showing the relationship among assets, liabilities, and owner's equity. |
Transaction | Any business activity that changes assets, liabilities, or owner's equity. |
Account | A record that summarizes all the transactions pertaining to a single item in the accounting equation. |
Account Title | The name given to an account. |
Sale on Account | A sale for which payment will be received at a later date. |
Expense | The costs of goods or services used to operate a business. |
Withdrawals | Assets taken from the business for the owner's personal use. |
Account Balance | The difference between the increase and decrease in an account. |
Capital Account | An account used to summarize the owner's equity in a business. |
Creditor | A person or business to whom a liability is owed. |
Revenue | An increase in equity resulting from the sale of goods or services |
T Account | An account device used to analyse transactions. |
Debit | An amount recorded on the left side of the account. |
Credit | An amount recorded on the right side of the account. |
Normal Balance | The side of an account that is increased. |
Chart of Accounts | A list of accounts used by a business. |
Accounts Payable | Accounts to be paid in the future for goods or services already acquired. |
Accounts Receivable | Amount to be received in the future due to the sale of goods or services. |
Journal | A form of recording transactions in chronological order. |
Journalizing | Recording transactions in a journal. |
Entry | Information for each transaction recorded in a journal. |
Double-Entry Accounting | The recording of debit and credit parts of a transaction. |
Source Documents | A business paper from which information is obtained for a journal entry. |
Check | A business form ordering a bank to pay cash from a bank account. |
Invoice | A form describing the goods or services sold, the quantity, the price, and the terms of sale. |
Sales Invoice | An invoice used as a source document for recording a sale on account. A sales invoice is also referred to as a sales ticket or a sales slip. |
Receipt | A business form giving written acknowledgement for cash received. |
Memorandum | A form on which a brief message is written to describe a transaction. |
Proving Cash | Determining that the amount of cash agrees with the accounting records. |