| A | B |
|---|
| accounting | ”planning |
| accounting system | a planned process for providing financial information that will be useful to management |
| accounting records | organized summaries of a business’s financial activities |
| financial statements | financial reports that summarize the financial condition and operations of a business |
| service business | a business that performs an activity for a fee |
| proprietorship | a business owned by one person |
| asset | anything of value that is owned |
| equities | financial rights to the assets of a business |
| liability | an amount owed by a business |
| owner’s equity | the amount remaining after the value of all liabilities is subtracted from the value of all assets |
| accounting equation | ”an equation showing the relationship among assets |
| ethics | the principles of right and wrong that guide an individual in making decisions |
| business ethics | the use of ethics in making business decisions |
| transaction | ”a business activity that changes assets |
| account | a record summarizing all the information pertaining to a single item in the accounting equation |
| account title | the name given to an account |
| account balance | the amount in an account |
| capital | the account used to summarize the owner’s equity in a business |
| revenue | an increase in owner’s equity resulting from the operation of a business |
| sale on account | a sale for which cash will be received at a later date |
| expense | a decrease in owner’s equity resulting from the operation of a business |
| withdrawal | assets taken out of a business for the owner’s personal use |
| GAAP | generally accepted accounting principles or rules that have evolved over time and from many sources |
| received investment cash from owner | + cash +owner’s capital |
| paid cash for supplies | -cash +supplies |
| paid cash for insurance | -cash +prepaid insurance |
| bought supplies on account | +supplies +accounts payable |
| paid cash on account | -cash –accounts payable |
| received cash from sales | +cash +owner’s capital |
| sold services on account | +accounts receivable +owner’s capital |
| paid cash for rent | -cash –capital |
| paid cash for telephone bill | -cash -owner’s capital |
| received cash on account | +cash –accounts receivable |
| paid cash to owner for personal use | -cash –capital |
| accounting equation | assets = liabilities + owner’s equity |
| computer consulting business | example of a service business |
| received cash | cash increases |
| paid cash | cash decreases |
| transaction habits | ”read the transaction |
| in balance | the left side of the accounting equation must always equal the right side |
| buying on account | paying for something at a later date |
| unit of measurement | accounting concept applied when business transactions are stated in numbers with common values i.e. US dollars |
| business entity | accounting concept requiring that an owner’s business records are separate from personal records |
| expense transactions | decrease owner’s equity |
| withdrawal transactions | decrease owner’s equity |
| revenue cash | increases owner’s equity |
| revenue on account | increases owner’s equity |
