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accounting chapter 1
| Term | Definition |
|---|---|
| a record summarizing all the information pertaining to a single item in the account equation | account |
| the difference between the increases and decreases in an account | account balance |
| the name given to an account (cash, supplies, capital) | account title |
| planning, recording, analyzing, and interpreting financial information | accounting |
| an equation showing the relationship among assets, liabilities, and owner's equity | accounting equation (assets = liabilities + owner's equity) |
| a planned process designed to compile financial data and summarize the results in accounting records and reports | accounting system |
| anything of value that is owned | asset |
| the use of ethics in making business decisions | business ethics |
| a formal written document that describes the nature of a business and how it will operate | business plan |
| the account used to summarize the owner's equity in a business | capital account |
| a person or business to whom a liability is owed | creditor |
| difference between assets and liabilities | equity |
| the principles of right and wrong that guide an individual in making decisions | ethics |
| the cost of goods or services used to operate a business | expense |
| financial reports that summarize the financial condition and operations of a business | financial statements |
| an amount owed by a business | liability |
| a formal report that shows what an individual owns, what an individual owes, and the difference between the two | net worth statement |
| the amount remaining after the value of all liabilities is subtracted from the value of all assets | net worth/owner's equity |
| a business owned by one person | propietorship |
| an increase in owner's equity resulting from the sale of goods or services | revenue |
| a sale for which payments will be received at a later date | sale on account |
| a business that performs an activity for a fee | service business |
| a business activity that changes assets, liabilities, or owner's equity | transaction |
| assets taken out of a business for the owner's personal use | withdrawals |
| generally accepted account principles | GAAP |
| financial information is recorded and reported separately from the owner's personal financial information | business entity (GAAP) |
| business transactions are reported in numbers that have common values; a common unit of measurement | unit of measurement (GAAP) |
| revenue is recorded at the time goods or services are sold | realization of revenue (GAAP) |
| "cash, supplies, insurance" | assets |
| "on account" | liability |
| "investment" | owner's equity |
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