Accounting vocabulary 1-1

business plan

A formal written document that describes the nature of a business and how it will operate (HINT: How something will operate is a-)

creditor

A person or business whom a liability is owned (HINT: If someone owes you something, you have-)

accounting system

A plan processed designed to compile financial data and summarize the results in accounting records and reports (HINT: Another word for Plan...)

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 owners equity in a business

accounting equation

Equation showing the relationship between Assets, liabilities, and owners equity

equities

Financial rights to the assets of a business

owner's equity

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

exspense

the cost of goods or services used to operate a business

personal net worth

the difference between personal assets and personal liabilities

account title

the name given to an account

ethics

the principals of right and wrong that guide an individual in making decisions

GAAP

Generally Accepted Accounting Principals. Standards and rules that accountants follow while recording and reporting financial statements

equity

The difference between assets and liabilities

account balance

The difference between the increase and decrease in an account (HINT: Has to have and even-!!!)

accounting

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

business ethics

The use of ethics in making business decisions (HINT: Answer is in this definition!!)

proprietorship

a business owned by one person

service business

a business that preforms an activity for a fee

net worth statement

a formal report that shows what an individual owes, owns, and the difference between the two

sale on account

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

liability

an amount owed

revenue

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

transaction

any business activity that changes assets, liabilities, or owners equity

asset

anything of value that is owned

withdraws

assets taken from the business for the owner's personal use

financial statement

financial reports that summarize the financial condition and operation of a business