Term
|
Definition
| Planning, recording, analyzing, and interpreting financial data |
|
|
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 a business's financial activities |
|
|
Term
| What often contributes to business failures or bankruptcy? |
|
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 Music do? |
|
Definition
| Rent office space and the instruments used to teach music lessons |
|
|
Term
| What is the asset equation? |
|
Definition
| Assets=Liabilites+ Owner's Equity |
|
|
Term
|
Definition
| Anything of value that is owned |
|
|
Term
| What are some examples of assets? |
|
Definition
|
|
Term
|
Definition
| Financial rights to assets of a business |
|
|
Term
|
Definition
| An amount owned by a business |
|
|
Term
| What is the Owner's Equity? |
|
Definition
| The amount remaining after the value of all liabilities is subtracted from the value of all assets |
|
|
Term
| What is important to remember about the accounting equation? |
|
Definition
| It must be in balance to be correct. The total of the amounts on the left side of the equation must always equal the total of the amounts on the right side |
|
|
Term
|
Definition
| Business activity that changes assets, liabilities, or owner's equity |
|
|
Term
|
Definition
| Record summarizing all the information pertaining to a single item in the accounting equation |
|
|
Term
|
Definition
|
|
Term
| What is a Cash account for? |
|
Definition
| Used to summarize information about the amount of money the business has available |
|
|
Term
| What is the account balance? |
|
Definition
| The amount in the account |
|
|
Term
| What is the Capital Account? |
|
Definition
| Account used to summarize the owner's equity in a business and the owner's Equity account. |
|
|
Term
| What is Encore music's capital account called? |
|
Definition
|
|
Term
|
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
1. Assets- located on the left side of the accounting equation, which means that assets are also listed on the left side of the balance sheet.
2. Liabilities- located on the right side of the accounting equation which mean that liabilities are also listed on the right side of the balance sheet.
3. Owner's Equity- located on the right side of the accounting equation, which means that owner' equity is also listed on the right side of the balance sheet. |
|
|
Term
| What are the steps to preparing a balance sheet? |
|
Definition
1. Write the heading centered on the top three lines of the balance sheet, the name of the business, the name of the report, and the date if the report.
2. Prepare the Assets section. Center the word "Assets" on the first line of the wide column on the left. Under this heading, write each asset account and amount.
3. Prepare the liabilities section. Center the word "Liabilities" on the first line of the wide column on the right. Under this heading write each liability account and amount.
4. Prepare The Owner's Equity section. Center the word "Owner's Equity" on the next blank line under the liabilities section. Under this heading write the owner's equity account title and amount.
5. Add all the asset accounts. Add the liabilities and owner's equity amounts. If the totals equal then the balance sheet is in balance (correct).
6. Rule a single line across each amount column. A single line means that the amounts are being added or subtracted.
7. On the next line of the left side write total assets and write the total asset amount under the single rule. On the right side, write Total liabilities and total owner's equity amount under the single rule.
8. Rule double lines below the amount column totals. Double rules means that the totals have been verified as correct. |
|
|
