The process of recording, summarizing, analyzing, and interpreting financial activities to allow individuals and companies to make informed judgements and decisions
Assets= Liabilities+ Owners equity. Referred to as the basic accounting equation
Time frame of which accounting records are maintained. Anywhere from a month to a year.
The liability that results from purchasing goods or services on credit.
The asset arising from selling goods or services on credit to customers.
An item with a monetary value owned by a business
A listing of the firm’s assets, liabilities, and owner’s equity at a specific point of time. Also known as Statement of financial position statement
An organization that operates with the objective of earning a profit
Business entity concept
A business is a distinct economy entity or unit that is separate from its owner and from any other business. Requires that the transactions of a business be recorded separately from the personal transactions of the business owner.
An asset; paper money, coins, checks, and money orders payable to a business.
A form of business organization that is owned by investors or stockholders that has a separate legal existence from its owners
An asset should be recorded at its actual cost
A business or person to whom a debt is owed
All business transactions are recorded as having at least two effects on the basic accounting elements.
A physical asset used by a business in its operations
Principles of moral conduct that guide the behavior of individuals and businesses.
The costs of operating a business
summaries of financial activities
A summary of a business’s revenue and expenses for a specific period of time. Also known as an earning statement, operating statement, statement of operations, and profit and loss statement.
A debt owed to a creditor
Limited liability Company (LLC)
Organization that combines features of a corporation and those of a partnership or sole proprietorship.
Business that produces a product to sell for profit.
Business that purchases goods produced by others and then sells them to a customer to earn a profit. Also known as the trading business.
Excess of revenue over total expenses. Also known as net profit or net earnings.
excess of total expenses over revenue.
a formal written promise to pay a specified amount at a future date.
the difference between assets and liabilities; also referred to as capital, proprietorship, and net worth.
A business co-owned by two or more people.
Revenue should be recorded when it’s earned
Income earned from carrying out the major activities of a firm.
Sarbanes- Oxley Act of 2002
A law passed by Congress requiring companies to certify the accuracy of their financial information and intended to restore the public’s confidence in the financial statements of companies; often referred to as Sarbanes-Oxley or SOX
A business that preforms services for customers to earn a profit.
Shift in assets
A change that occurs when one asset is exchanged for another asset, such as when supplies are traded for cash; occurs when one asset goes up in amount and another goes down.
Business owned by one person.
Statement of owner’s equity
Statement of owner’s equity- A summary of the changes that have occurred in owners’ equity during a specific period of time; also referred to as capital statement.
Short term physical assets needed in the operation of a business.
Capable of being touched; the quality of a physical asset.
any activity that changes the value of a firm’s assets, liabilities, or owners’ equity.
The removal of business assets for the owner’s personal use.
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