Term
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Definition
| Planning, recording, analyzing, and interpreting information |
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Term
| What is an accounting system? |
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Definition
| A planned process for providing financial information that will be useful to management |
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Term
| What are accounting records? |
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Definition
| Organized summaries of a business's financial activities |
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Term
| What often contributes to business failures or bankruptcies? |
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Definition
| Inaccurate accounting records |
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Term
| What is a service business? |
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Definition
| A business that performs an activity for a fee |
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Term
| What is a proprietorship? |
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Definition
| A business owned by one person |
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Term
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Definition
| They rent office space and instruments. |
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Term
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Definition
| Anything of value that is owned |
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Term
| What are some examples of assets? |
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Definition
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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 busines |
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Term
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Definition
| The amount left over after subtracting liabilities from assets |
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Term
| What is important 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 the accounts on the left side of the equation must always be equal the total amounts on the right side |
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Term
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Definition
| a business activity that changes assets, liabilities, or owner's equity. |
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Term
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Definition
| An account is a record summarizing all the information pertaining to a single item in the accounting equation. |
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Term
| What is an account title? |
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Definition
| The name given to an account. |
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Term
| What is the cash account for? |
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Definition
| It is used to summarize information about the amount of money the business has available. |
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Term
| What is the account balance? |
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Definition
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Term
| What is the cash account for? |
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Definition
| It is used to summarize information about the amount of money the business has available. |
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Term
| What is the account balance? |
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Definition
| The amount in an account. |
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Term
| What is the capital account? |
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Definition
| The account used to summarize the owner's equity in a business |
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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 sections of a balance sheet? |
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Definition
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.
Liabilities- located on the right side of the accounting equation, and on the right side of the balance sheet.
Owner's equity- is also located on the right side of the accounting equation, and on the left side of the balance sheet. |
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Term
| ยท What are the steps to preparing a balance sheet? |
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Definition
Write the heading centered on three lines at the top of balance sheet; name of business, name of report, and date of report.
Prepare the assets section; center the word assets on the first line of wide column on the left. Under the heading write each account and amount.
Prepare the liabilities section on the right side; center the word liabilities on the first line of the wide column on the right side. Under this heading write the owner's equity account title and amount.
Add the asset account, and add the liability accounts, if both totals are equal it is correct.
Rules a single line across each amount column, the line means amounts are being added or subtracted. |
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