College Accounting A Practical Approach
Chapter 1 Terms
Sole proprietorship - ANS Owned by one person
Partnership - ANS Owned by 2 or more people
Corporation - ANS Owned by stockholders
LLC - ANS Owned by a limited number of members
Sarbanes-Oxley Act - ANS Helps prevent fraud at publicly-held companies
The basic accounting equation - ANS Accountants divide the equities into two parts; the claim
of creditors labeled liabilities & the claim of business labeled owner's equity
(Assets = Liabilities + Owners Equity)
The relationship between assets & equities - ANS Assets = Equities
(total value (total claims
items owned against the assets)
by business)
The expanded accounting equation - ANS Assets = Liabilities + Owner's Capital - Owner's
Drawings + Revenues - Expenses
Assets - ANS Properties of value owned by a business; cash, land, supplies, office equipment,
buildings, & other properties of value
Liabilities - ANS Amounts owed to creditors
Equities - ANS Rights of financial claims to the assets
Capital - ANS The owner's investment in a company does not always mean cash, includes any
assets the owner has put into the business
Revenue - ANS Generates an inward flow of assets; when revenue totals more than expenses,
net income is the result
Chapter 1 Terms
Sole proprietorship - ANS Owned by one person
Partnership - ANS Owned by 2 or more people
Corporation - ANS Owned by stockholders
LLC - ANS Owned by a limited number of members
Sarbanes-Oxley Act - ANS Helps prevent fraud at publicly-held companies
The basic accounting equation - ANS Accountants divide the equities into two parts; the claim
of creditors labeled liabilities & the claim of business labeled owner's equity
(Assets = Liabilities + Owners Equity)
The relationship between assets & equities - ANS Assets = Equities
(total value (total claims
items owned against the assets)
by business)
The expanded accounting equation - ANS Assets = Liabilities + Owner's Capital - Owner's
Drawings + Revenues - Expenses
Assets - ANS Properties of value owned by a business; cash, land, supplies, office equipment,
buildings, & other properties of value
Liabilities - ANS Amounts owed to creditors
Equities - ANS Rights of financial claims to the assets
Capital - ANS The owner's investment in a company does not always mean cash, includes any
assets the owner has put into the business
Revenue - ANS Generates an inward flow of assets; when revenue totals more than expenses,
net income is the result
