Accounting Chapter 1 Vocab

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

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

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

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

Anything of value that is owned

An amount owed

The difference between personal assets and personal liabilities

The difference between assets and liabilities

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

The use of ethics in making business decisions

A business that performs an activity for a fee

A business owned by one person

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

Generally accepted accounting principles. The standards and rules that accountants follow while recording and reporting financial activities

Financial rights to the assets of a business

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

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

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

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

The name given to an account

The difference between the increases and decreases in an account

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

A person or business to whom a liability is owed

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

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

The cost of goods or services used to operate a business

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