Accounting quiz

service business

a business that performs an activity for a fee.

GAAP

Generally accepted accounting principles. The standards and rules that accountants follow while recording and reporting financial activities.

account title

the name given to an account.

creditor

A person or business to whom a liability is owed.

business ethics

The use of ethics in making business decisions.

business plan

a formal written document that describes the nature of a business and how it will operate.

revenue

An increase in equity resulting from the sale of goods or services.

sale on account

A sale for which payment will be received at a later date.

asset

Anything of value that is owned.

withdrawals

Assets taken from the business for the owner's personal use.

ethics

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

capital account

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

liability

An amount owed.

personal net worth

The difference between personal assets and personal liabilities.

accounting

The process of planning, recording, analyzing, and interpreting financial information.

equity

The difference between assets and liabilities.

owner's equity

The amount remaining after the value of all liabilities is subtracted from the value of all assets.

proprietorship

A business owned by one person.

financial statements

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

account balance

The difference between the increases and decreases in an account.

accounting equation

An equation showing the relationship among assets, liabilities, and owner's equity.

expense

The cost of goods or services used to operate a business.

transaction

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

accounting system

A planned process designed to compile financial data and summarize the results in accounting records and reports.

net worth statement

A formal report that shows what an individual owns, what an individual owes, and the difference between the two.

equities

Financial rights to the assets of a business.

account

A record that summarizes all the transactions pertaining to a single item in the accounting equation.