Unit 1 Flashcards
what is accounting?
recording any financial information
what is an accounting system?
compiles financial data, summarizes results in records + reports
what is a financial statement?
reports and summarizes financial condition and operations of business
what is a net worth statement?
allows a person extending a loan to see financial position of borrower on specific date
what is an asset?
anything of value that is owned
what is a liability?
any amount owed
what is personal net worth?
difference between personal assets and liabilities
what is equity?
difference between business assets and liabilities
what are ethics?
principles of right and wrong that guide you to make good decisions
what are business ethics?
use of ethics in making business decisions
what is a service business?
business performs service for a fee
what is a proprietorship?
business owned by one person
what is a business plan?
written document describes nature of business and how it works
what does gaap stand for?
generally accepted accounting principles
what are equities?
financial rights to assets of a business
what is owner’s equity?
amount remaining after liabilities subtracted from all assets
what is an accounting equation?
shows relationship among assets, liabilities, and owner’s equity
what is a transaction?
any business activity that changes assets, liability, or owner’s equity
what is an account?
record summarizes all transactions for single item on equation
what is an account title?
name on account
what is account balance?
difference between increases and decreases in account
what is a capital account?
account used to summarize owner’s equity in business
what is a creditor?
person or business to whom a liability is owed
