Chapter 1 Flashcards
(27 cards)
Accounting
Planning, recording, analyzing, and interpreting financial information
Accounting System
A planned process for providing financial information that will be useful to managers
Accounting Records
Organized summaries of a business’s financial activities.
Service Business
A business that performs an activity for a fee
Proprietorship/Sole Proprietorship
A business owned by one person
Financial Statements
Financial reports that summarize the financial condition and operations of a business
Concept: Business Entity
A business’s financial information is recorded and reported separetaly from the owner’s personal financial information
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 relationship among assets, liabilities, and owner’s 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
Transaction
A business activity that changes assets, liabilities, or owner’s equity
Concept: Unit of Measurement
Business transactions are stated in numbers that have common values; using a common unit of measurement
Account
A record summarizing all the information pertaining to single item in the accounting equation
Account Title
The name given to an account
Account Balance
Amount in an account
Capital
The account used to summarize the owner’s equity in a business
Revenue
An increase in owner’s equity resulting from the operation of a business
Sale on Account/Charge Sale
A sale for which cash will be received at a later date
Concept: Realization of Revenue
Revenue is recorded at the time goods or services are sold
Expense
Decrease in owner’s equity resulting from the operation of a business
