Accounting chp 1 def

Account

a record that summarizes all the transactions pertaining to a single item in the accounting equation

Account balance

difference between increases and decreases in an account

Capital account

account used to summarize the owners equity in a business

Creditor

A person or business to whom a liability is owed

Revenue

increase in equity resulting from the sale of goods or services

accounting system

a planned process designed to compile financial data and summarize results in accounting records+reports

financial statements

financial reports that summarize the financial condition and operations of a business

Net worth statement

a formal report that shows what an individual owns, owes, and the difference between the two

Personal net worth

difference between personal assets and personal liabilities

Equity

difference between assets and liabilities

Service business"

a business that performs an activity for a fee

GAAP

standards and rules that accountants follow while recording and reporting financial activities

Equities

financial rights to the assets of a business

Owners equity

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

Transaction

Any business activity that changes assets, liabilties, or owners equity