Accounting-Chapter 1 Questions and Graded Answers.
The process of planning, recording, analyzing, and interpreting financial information. -
accounting
A planned process designed to compile financial data and summarize the results in accounting
records and reports. - accounting system
Financial reports that summarize the financial condition and operations of a business. -
financial statements
A formal report that shows what an individual owns, what an individual owes, and the difference
between the two. - net worth statement
Anything of value that is owned. - asset
An amount owed. - liability
The difference between personal assets and personal liabilities. - personal net worth
The difference between assets and liabilities. - equity
The principles of right and wrong that guide an individual in making decisions. - ethics
The use of ethics in making business decisions - business ethics
A business that performs an activity for a fee. - service business
, A business owned by one person. - proprietorship
A formal written document that describes the nature of a business and how it will operate. -
business plan
Generally Accepted Accounting Principles. The standards and rules that accountants follow
while recording and reporting financial activities. - GAAP
Financial rights to the assets of a business. - equities
The amount remaining after the value of all liabilities is subtracted from the value of all assets. -
owner's equity
The equation showing the relationship among assets, liabilities, and owner's equity. -
accounting equation
Any business activity that changes assets, liabilities, or owner's equity. - transaction
A record that summarizes all the transactions pertaining to a single item in the accounting
equation. - account
The name given to an account. - account title
The difference between the increases and decreases in an account. - account balance
An account used to summarize the owner's equity in a business. - capital account
A person or business to whom a liability is owed. - creditor
The process of planning, recording, analyzing, and interpreting financial information. -
accounting
A planned process designed to compile financial data and summarize the results in accounting
records and reports. - accounting system
Financial reports that summarize the financial condition and operations of a business. -
financial statements
A formal report that shows what an individual owns, what an individual owes, and the difference
between the two. - net worth statement
Anything of value that is owned. - asset
An amount owed. - liability
The difference between personal assets and personal liabilities. - personal net worth
The difference between assets and liabilities. - equity
The principles of right and wrong that guide an individual in making decisions. - ethics
The use of ethics in making business decisions - business ethics
A business that performs an activity for a fee. - service business
, A business owned by one person. - proprietorship
A formal written document that describes the nature of a business and how it will operate. -
business plan
Generally Accepted Accounting Principles. The standards and rules that accountants follow
while recording and reporting financial activities. - GAAP
Financial rights to the assets of a business. - equities
The amount remaining after the value of all liabilities is subtracted from the value of all assets. -
owner's equity
The equation showing the relationship among assets, liabilities, and owner's equity. -
accounting equation
Any business activity that changes assets, liabilities, or owner's equity. - transaction
A record that summarizes all the transactions pertaining to a single item in the accounting
equation. - account
The name given to an account. - account title
The difference between the increases and decreases in an account. - account balance
An account used to summarize the owner's equity in a business. - capital account
A person or business to whom a liability is owed. - creditor
