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Brittany's chapter 1.1 facts
Chapter 1.1 facts
24
Accounting
10th Grade
09/06/2006

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Term
What is accounting?
Definition
Planning, recording, analyzing and interpreting financial information.
Term
What is an accounting system?
Definition
A planned process for providing financial information that will be useful to management.
Term
What are accounting records?
Definition
Organized summaries of business's financial activities.
Term
What often contributes to business failures or bankruptcies?
Definition
Inaccurate accounting records.
Term
What is a service business?
Definition
A business that performs an activity for a fee.
Term
What is a proprietorship?
Definition
A business owned by one person.
Term
What does encore do?
Definition
They rent office space and the instruments used to teach music lessons.
Term
Accounting Equation
Definition
assets=liabilities+owner's equity
Term
What is an asset?
Definition
Anything of value that is owned.
Term
What are some examples?
Definition
Cash and supplies.
Term
What are equities?
Definition
Financial rights to the assets of the business.
Term
What is a liability?
Definition
An amount owed by a business.
Term
What is owner's equity?
Definition
The amount left over after subtracting liabilities form assets
Term
What is important about the accounting equation?
Definition
It MUST be in balance in order to be correct. This means that the total of the accounts on the left side of the equation must always be equal to the total amounts on the right side.
Term
What is a transaction?
Definition
A transaction is a business activity that changes assets, liabilities and owner's equity.
Term
What is an account?
Definition
An account is a record summarizing all the information pertaining to a single item in the accounting equation.
Term
What is an account title?
Definition
The name given to an account.
Term
What is the Cash for?
Definition
The cash account is used to summarize information about the amount of money the business has available.
Term
What is an account balance?
Definition
The amount in a account.
Term
What is capital?
Definition
The account used to summarize the account in a owner's business equity
Term
What is Encore music's capital account called?
Definition
Barbra Trevino, capital
This account summarizes the owners equity in Encore.
Term
What is a balance sheet?
Definition
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
Term
What are the major sections of a balance sheet?
Definition
the assets, liabilities and owner's equity
Term
What are the steps to preparing a balance sheet?
Definition
1.Write the heading centered on the lines at the top of the balance sheet: the name of the business, the name of the report, and the date of the report.
2.Prepare the assets section. Center the word "Assets" on the first line of the wide column on the left write each asset account title and amount.
3.Prepare liabilities section. Center the word "Liabilities" on the first line of the wide column on the right. Under the heading Write each liability account title and amount.
4.Prepare owner's equity section. Center the words "Owner's Equity" on the next blank line under the liabilities section. Under this write the owner's equity account title and amount.
5.Add all the assets. All the liabilities. It totals are equal the balance sheet is balance. (correct)
6.Rule a single line across each amount column. A single line means that the amounts are to be added or subtracted.
7.On the next line write total assets on the left and total liabilities on the right.
8.Write down the totals and make sure they are correct.
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