Chapter 1 Vocabulary

The process of planning, recording, analyzing, and interpreting financial information.

• accounting system

• revenue

• accounting

• accounting equation

A business owned by one person.

• proprietorship

• liability

• accounting system

• personal net worth

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

• accounting system

• GAAP

• transaction

• withdrawals

An increase in equity resulting from the sale of goods or services.

• expense

• equities

• account

• revenue

The cost of goods or services used to operate a business.

• expense

• withdrawals

• account balance

• equities

An amount owed.

• sale on account

• liability

• owner’s equity

• asset

Assets taken from the business for the owner’s personal use

• sale on account

• proprietorship

• owner’s equity

• withdrawals

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

• revenue

• owner’s equity

• account title

• proprietorship

A planned process designed to compile financial data and summarize the results in accounting records and reports

• business plan

• net worth statement

• financial statements

• accounting system

A formal written document that describes the nature of a business and how it will operate.

• business plan

• personal net worth

• equity

• proprietorship