Accounting - Chapter 1


planning, recording, analyzing, and interpreting financial information

accounting system

a 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


a business owned by one person


anything of value that is owned


financial rights to the assets of a business


an amount owed by a business

owners 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


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

business ethics

the use of ethics in making business decisions


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


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

account title

the name given to an account

account balance

the amount in an account


the account used to summarize the owner's equity in a business


an increase in 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


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


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