Chapter 1

Accounting

Planning, recording, analyzing, and interpreting financial information

Accounting System

Planned process for providing financial information that will be useful to management

Accounting Records

Organized summaries of a business's financial activities

Financial Statements

Financial reports that summarize the financial condition and operations of a business

Service Business

A business that performs an activity for a fee

Proprietorship

A business owned by one person

Asset

Anything of value that is owned

Equities

Financial rights to the assets of a business

Liability

An amount owned by 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 relation among asses, liabilities, and owners equation

Ethics

The principles of right and wrong that guide an individual in making decisions

Business Ethics

The use of ethics in making business decisions

Transaction

a business activity that changes assets, liabilities, or owner's equity

Account

A record summarizing all the information pertaining to a single item in the accounting equation

Account Balance

The amount in an account

Capital

The account used to summarize the owners equity in a business

Account Title

The name given to an account

Revenue

An increase in the owner's equity resulting from the operation of a business

Sale on Account

A sale for which cash will be received at a later date

Expense

A decrease in owner's equity resulting from the operation of a business

Withdrawals

Assets taken out of a business for the owner's personal use

Accounting

Planning, recording, analyzing, and interpreting financial information

Accounting System

Planned process for providing financial information that will be useful to management

Accounting Records

Organized summaries of a business's financial activities

Financial Statements

Financial reports that summarize the financial condition and operations of a business

Service Business

A business that performs an activity for a fee

Proprietorship

A business owned by one person

Asset

Anything of value that is owned

Equities

Financial rights to the assets of a business

Liability

An amount owned by 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 relation among asses, liabilities, and owners equation

Ethics

The principles of right and wrong that guide an individual in making decisions

Business Ethics

The use of ethics in making business decisions

Transaction

a business activity that changes assets, liabilities, or owner's equity

Account

A record summarizing all the information pertaining to a single item in the accounting equation

Account Balance

The amount in an account

Capital

The account used to summarize the owners equity in a business

Account Title

The name given to an account

Revenue

An increase in the owner's equity resulting from the operation of a business

Sale on Account

A sale for which cash will be received at a later date

Expense

A decrease in owner's equity resulting from the operation of a business

Withdrawals

Assets taken out of a business for the owner's personal use