business - accounting

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accounting

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Business

30 Terms

1

accounting

planning, recording, analyzing, and interpreting financial information

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2

accounting system

a planned process for providing financial information that will be useful to management

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3

accounting records

organized summaries of a business’s financial activities

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4

service business

a business that performs an activity for a fee

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5

proprietorship

a business owned by one person

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6

asset

anything of value that is owned

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7

equities

financial rights to the assets of a business

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8

liability

an amount OWED by a business

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9

owner’s equity

amount remaining after all liabilities of subtracted from the value of all assets

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10

accounting equation

equation showing the relationship among assets, liabilities, and onwer’s equity

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11

transaction

business activity that changes assets, liabilities, or owner’s equity

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12

account

record summarizing all the information pertaining to a single item in the accounting equation

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13

account title

name given to an account

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14

account balance

amount in an account

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15

capital

account used to summarize the owner’s equity in a business

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16

balance sheet

a financial statement that reports assets, liabilities, and owner’s equity

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17

true

T or F: accounting is the language of business

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18

true

T or F: keeping personal and business records separate is an application of the business entity concept

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19

true

T or F: assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business

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20

true

T or F: the relationship among assets, liabilities, and owner’s equity can be written as an equation

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21

false

T or F: the equation is called the accounting equation and does not have to be in balance to be correct

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22

false

T or F: the sum of assets and liabilities of a business always equal the investment of the business owner

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23

false

T or F: recording business costs in terms of hours required to complete projects and sales in terms of dollars is an application of the unit measurement concept

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24

true

T or F: the capital account is an owner’s equity account

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25

false

T or F: if two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance

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26

false

T or F: when a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the owner owes future coverage

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27

true

T or F: when items are bought and paid for later this is referred to as buying on account

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28

false

T or F: when cash is paid on account, a liability is increased

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29

true

T or F: the Going Concert account concept affects the way financial statements are prepared

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30

true

T or F: on a balance sheet, a single line means that amounts are to be added or subtracted

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