Unit 1 vocab

Question 1

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

Answer 1

accounting

Question 2

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

Answer 2

accounting system

Question 3

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

Answer 3

financial statement

Question 4

A formal report that summarize the financial condition and operations of a business

Answer 4

net worth statement

Question 5

Anything of value that is owned

Answer 5

asset

Question 6

An amount owed

Answer 6

liability

Question 7

The difference between personal assets and personal liabilities

Answer 7

personal net worth

Question 8

The difference between assets and liabilities

Answer 8

equity

Question 9

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

Answer 9

ethics

Question 10

The use of ethics in making business decisions

Answer 10

business ethics

Question 11

A business that performs an activity for a fee

Answer 11

service business

Question 12

A business owned by one person

Answer 12

proprietorship

Question 13

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

Answer 13

business plan

Question 14

(Generally Accepted Accounting Principles) The standards and rules that accountants follow while recording and reporting financial activites

Answer 14

GAAP

Question 15

Financial rights to the assets of a business

Answer 15

equities

Question 16

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

Answer 16

owner’s equity

Question 17

The equation showing the relationship among assets, liabilities and owner’s equity

Answer 17

accounting equation

Question 18

Any business activity that changes assets, liabilities, or owner equity

Answer 18

transaction

Question 19

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

Answer 19

account

Question 20

The name given to an account

Answer 20

account title

Question 21

The difference between the increases and decreases in an account

Answer 21

account balance

Question 22

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

Answer 22

capital account

Question 23

A person or business to whom a liability is owed

Answer 23

creditor

Question 24

an increase in equity resulting from the sale of goods or services

Answer 24

revenue

Question 25

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

Answer 25

sale on account

Question 26

The cost of goods or services used to operate a business

Answer 26

expense

Question 27

Assets taken from the business for the owner’s personal use

Answer 27

withdrawals