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| accounting | The process of planning, recording, analyzing, and interpreting financial information. |
| accounting system | A planned process designed to compile financial data and summarize the results in accounting records and reports. |
| financial statements | Financial reports that summarize the financial condition and operations of a business. |
| net worth statement | A formal report that shows what an individual owns, what an individual owes, and the difference between the two. |
| asset | Anything of value that is owned. |
| liability | An amount owed. |
| personal net worth | The difference between personal assets and personal liabilities. |
| equity | The difference between assets and liabilities. |
| ethics | The principles of right and wrong that guide an individual in making decisions. |
| 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 | A formal written document that describes the nature of a business and how it will operate. |
| GAAP | Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities. |
| 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. |
| accounting equation | The equation showing the relationship among assets, liabilities, and owner's equity. |
| transaction | Any business activity that changes assets, liabilities, or owner's equity. |
| account | A record that summarizes all the transactions pertaining to a single item in the accounting equation. |
| account title | The name given to an account. |
| account balance | The difference between the increases and decreases in an account. |
| 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. |
| revenue | An increase in equity resulting from the sale of goods or services. |
| sale on account | A sale for which payment will be received at a later date. |
| expense | The cost of goods or services used to operate a business. |
| withdrawals | Assets taken from the business for the owner's personal use. |
