Term | Definition |
Accounting Period | A Period of time covered by an accounting report |
Accounting System | Designed to collect, document, and report financial tranactions |
Capital | Money that investors, banks, or business owners supply. |
Charter | Gives corporations certain rights and privileges |
Computerized Accounting System | Accounting info is processed by computer |
Corporation | Business recognized by law to have a life of its own. |
Entrepreneur | Person who transforms their idea into product or services in the real world. |
Financial Accounting | Focuses on reporting information to an external user |
Financial Reports | Summarized information about the financial status of a business |
Free Enterprise System | People are free to produce the goods and service that they choose. |
GAAP | Generally Accepted Accounting Principles |
Going Concern | A business is expected to continue indefinitely |
Loss | Business's spend more money than they can make. |
Management Accounting | Focuses on reporting information to internal uers |
Manual Accounting System | Accounting info is processes by hand |
Manufacturing Business | Buys raw materials, uses labor and machinery to transform them into finished products. |
Partnership | Business that is owned by two or people people. |
Merchandising Business | Buys finished product and resells them to individuals or other businesses |
Profit | The amount of money earned over and above the cost of operating the business. |
Service business | Provides a needed service, for a fee. |
Sole Proprietorship | Business owned by one person. |
Business transaction | Economic event that causes a decrease or increase in assets, liability or owners equity |
Account | Subdivision under assets, liabilities or owners equity. |
Accounts receivable | Total money owed to a business |
Accounts Payable | The amount owed, or payable, to the creditors of a business. |
Investment | Money or other property paid out to produce profit |
On Account | When a business buys an item on credit. |
Revenue | Income earned from the sale of goods or services. |
Expense | The cost of services or goods. |
Withdrawl | Takes cash from business revenue for personal use. |
Account | Subdivision under assets, liabilities, or owners equity |
Accounting Equation | Assets=Liabilities+Owner's Equity |
Accounts Payable | Money owed by a company to its creditors. |
Accounts Receivable | Money owed to a company by its debtors. |
Assets | Property owned by a person or company |
Business Transaction | An economic event that initiates the accounting process of recording it in a company's accounting system. |
Credit | An entry recorded on the right-hand side |
Creditor | A person or company to whom money is owed. |
Equities | The value of the shares issued by a company |
Expense | The cost required for something |
Investment | The action or process of investing money for profit or material result. |
Liabilities | An obligation and it is reported on a company's balance sheet |
On Account | Purchase/sale of merchandise or a service on credit. |
Owner's Equity | The owners claims to assets |
Property | Anything of value that is owned by a person or business |
Revenue | Income earned from sales of goods/services |
Withdrawal | Decreases Both OE and Assets |
Correcting Entry | Used to fix an error after posting. |
General Ledger | Permanent ledger organized by account number |
Ledger account forms | Specific Accounts |
Posting | Transferring information from general ledger to ledger accounts |
Proving the Ledger | Comparing the two totals to see whether they are equal. |
Slide Error | Occurs when a decimal point is moved by mistake |
Transposition Error | Occurs when two digits in the same number are switched |
Trial Balance | Method to Prove the ledger |