Test #1 Flashcards
(19 cards)
Creditor
A person or business that has extended credit or loan money to another individual or business
Financial position
The financial status of a person or company represented by the assets, liabilities and net worth or personal equity
Personal net worth
The difference between the value of items owed and the debt owed
Assets
Items of value owned by a business or a person
Liabilities
The debts of a person or business
Personal equity
A person‘s net worth
Balance sheet equation
A equals, L plus OE
Purpose of accounting
To provide financial information for decision-making
Business entity principle
Requires that each business be considered a separate entity, and that the financial data for each business be kept separate from the owners, personal financial data
Balance sheet
A financial statement that list the assets, liabilities and owners equity at a specific date
Owners equity
The owners claim against the assets of the company after payment of all liabilities
Accounts receivable
Refers to the total amount due from debtors usually within 30 days
Account payable
Refers to the total amount owed to creditors for the purchase of goods or services by the business
Equities
Claims by both creditors and owners against the assets of a company
Liquidity order
The order in which current assets would likely be converted into cash
Maturity date
The payment due date of any liability
Cost principle
Ask the show on the balance sheet at the cost of their acquisition or construction
Bookkeeping
Preparing and recording information in the accounting records
Accounting
Controlling,
analyzing, and interrupting the financial information in the accounting system
