Accounting Chapter 1

accounting

an information system that measures, processes, and communicates financial information

accounting equation

assets= liabilities + owner’s equity

assets

the economic resources of a company that are expected to benefit future operations

balance sheet

a financial statement that reports assets, liabilities, the owner’s equity on aa specific date

business

an economic unit that aims to sell goods and services to customers at prices that will provide adequate returns to it’s owners

CPA

a public accountant who has met stringent state licensing requirements

Corporation

a business unit granted a state charter recognizing its separate legal entity having its own rights, privileges, and liabilities distinct from those of its owners

creditors

people who lend money or services before being paid

ethics

code of conduct that addresses whether actions are right or wrong

expenses

decrease in owner’s goods due to the cost of goods or services used in the course of earning revenue

financial accounting

profit

difference between amounts received from customers for goods and service