Term
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Definition
| Planning, recording, analyzing, and interpreting information.
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Term
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Definition
| A planned process for providing financial information that will be useful to management. |
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Term
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Definition
| Organized summaries of a business's financial activities. |
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Term
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Definition
| A business that performs an activity for a fee. |
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Term
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Definition
| A business owned by one person. |
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Term
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Definition
| Anything of value that is owned. |
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Term
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Definition
| Financial rights to the assets of a business. |
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Term
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Definition
| An amount owed by a business. |
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Term
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Definition
| The amount remaining after the value of all liabilities is subtracted from the value of all assets. |
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Term
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Definition
| Shows the relationship among assets, liabilities and owner's equity. |
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Term
| What is the accounting equation? |
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Definition
Assets=Liabilities + Owner's Equity
(A=L+OE) |
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Term
| What are examples of assets? |
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Definition
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Term
| What are the things that contribute to failures or bankruptcy? |
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Definition
| Inaccurate accounting records. |
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Term
| What is the important thing to remember about the accounting equation? |
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Definition
| It must be in balance in order to be correct. This means that the total of accounts on the left side of the equation must always equal the total of accounts on the right side. |
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Term
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Definition
| A financial statement that reports assets, liabilities, and owner's equity on a specific date. |
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Term
| What are the major parts of the balance sheet? |
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Definition
Assets: Located on the left side if the accounting equation, which means that assets are also listed on the left side if the balance sheet.
Liabilities: Located on the right side of the accounting equation, which means that liabilities are also listed on the right side of the balance sheet.
Owner's equity: located on the right side of the accounting equation, which means that Owner's equity is also listed on the right side of the balance sheet. |
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Term
| What is the first step to make a balance sheet? |
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Definition
| Write the heading and center it on the three lines at the top. Write the name of the business, the name of the report, and the date. |
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Term
| What is the second step to make a balance sheet? |
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Definition
| Prepare an assets section on the left side of the accounting equation. Center the word assets in the first line of the column. Then write each asset account title and the amount. |
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Term
| What is the third step to make a balance sheet? |
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Definition
| Liabilities are on the right side of the equation. Center the word on the first line of the wide column on the right. Under this heading write each liability account and amount. |
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Term
| What is the fourth step to make a balance sheet? |
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Definition
| Owner's equity are on the right side. Center the word on the right side under the Liabilities section. Under this heading write Owner's equity account title and the amount. |
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Term
| What is the fifth step to make a balance sheet? |
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Definition
| Add all the asset accounts. Add the liabilities and the owner's equity amounts. If the totals equal. The balance sheet is correct. |
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Term
| What is the sixth step to make a balance sheet? |
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Definition
| Rule a single line across each amount column. A single line means that the amounts are added or subtracted. |
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Term
| What is the seventh step to make a balance sheet? |
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Definition
| On the next line on the left side, write a total assets and write the total asset amount under the single rule. On the right side, write total liabilities and Owner's equity amount under the single rule. |
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Term
| What is the eighth step to make a balance sheet? |
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Definition
| Rule double lines below the amount column totals. Double rules mean that the totals have been verified as correct. |
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