Unit 1 Flashcards
accounting
planning, recording, analyzing, and interpreting financial information.
accounting system
process designed to compile financial data and sum the results in accounting reports.
financial statements
Financial reports that summarize the financial condition and operations of a business.
net worth statement
report that shows the difference between assets and liabilities.
personal net worth
The difference between personal assets and personal liabilities.
equity
The difference between assets and liabilities.
ethics
decision-making based on whats right and what’s wrong.
business ethics
The use of ethics in making business decisions.
service business
A business that performs an activity for a fee.
proprietorship
A business owned by one person.
business plan
document that describes how a business will operate.
GAAP
Generally accepted accounting principles. rules that accountants follow while recording and reporting financial activities.
equities
Financial rights to the assets of a business.
owner’s equity
assets-liabilities = OE
accounting equation
An equation showing the relationship among assets, liabilities, and owner’s equity.
account
A record that summarizes all the transactions pertaining to a single item in the accounting equation.
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.
sale on account
A sale for which payment will be received at a later date.
interest
An amount paid for the use of money for a period of time.
Compound interest
Interest paid on an original amount deposited in a bank plus any interest that has been paid.
