Chapter 2 Accounting Vocabulary and Business Organizations

A complete set of vocabulary flashcards based on Chapter 2 accounting terminology and forms of business organizations.

Accounting System

A system concerned with the process of recording and reporting financial information.

Accounting Period

The time period covered by an accounting report.

Business Entity

A business organization that exists independently of its owner's personal holdings.

Capital

Money invested in a business by an owner.

Corporation

A business organization recognized by law to have a life of its own, requiring a charter to operate, where owners hold shares of stock.

Entrepreneur

A person who is willing to take the risks of running a business.

Financial Accounting

Accounting focused on providing information to external users of accounting information.

GAAP

Generally Accepted Accounting Principles; the rules that accountants follow.

Going Concern

A business expected to operate in the future.

Loss

The result when a business spends more money than it receives.

Managerial Accounting

Accounting focused on providing information to internal users of accounting information.

Manufacturing Business

A business that transforms raw material into products.

Merchandising Business

A business that buys finished products and then sells them.

Partnership

A business organization owned by at least two individuals who usually enter into a written legal agreement before operating.

Profit

The amount of money earned over and above the amount spent to keep a business operating.

Service Business

A business organized to operate by providing professional services for a fee.

Sole Proprietorship

A business organization owned by a single individual whose success or failure depends heavily on the efforts of the owner.