Term
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Definition
| Planning, recording, analyzing, and interpreting financial data. |
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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 bankruptcy? |
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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
| What does Encore Music do? |
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Definition
| They rent office space and the instruments used to teach music lessons. |
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Term
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Definition
| Liabilities + Owner's Equity |
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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 buy a business. |
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Term
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Definition
| The amount left over after subtracting liabilities from assets. |
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Term
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Definition
| The amount left over after subtracting liabilities from assets. |
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Term
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Definition
| It’s 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 equations, 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, which means that liabilities are also listed on the right side of 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
| 2. What are the steps to preparing a balance sheet? |
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Definition
v Write the heading centered on the top three lines of the balance sheet: the name of the business, the name if the report (Balance Sheet) and the date of the report.
v 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.
v Prepare Liabilities section. Center the word "Liabilities" on the first line of the wide column on the right. Under this write each asset account and amount.
v Prepare Owner's Equity section, Center the words "Owner's Equity" on the next blank line under the Liabilities section. Under this heading write the Owner's Equity account title and amount.
v Add all the asset account. Add the liabilities and owner equity amounts. If the totals equal, the balance sheet is in balance (correct)
v Rule a single line across each amount column. A single line means the amounts are to be added or subtracted.
v 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 Owner's Equity amount under the single rule.
v Rule double lines below the amount column totals. Double rules means that the totals have been verified as correct. |
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