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