Accounting
is the process of planning, recording, analyzing, and interpreting financial information.
Accounting System
is 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 are called
Net Worth System
allows the person extending the loan to see the financial position of a borrower on a specific date and make a lending decision.
Asset
Anything of value that is owned
Liability
an amount owed
Personal Net Worth
The difference between personal assets and personal liabilities
Equity
the difference between assets and liabilities.In business, net worth is also called equity.
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
Propietership
A business owned by one personA proprietorship is sometimes referred to as a sole proprietorship
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
Assets = Liabilities + Owner's EquityThe equation showing the relationship among assets, liabilities, and owner's equity.
Transaction
Accountants call any 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 Title
the name given to an account
Account Balance
the difference between the increases and decreases 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