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

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

The difference between the increases and decreases in an account.

The name given to an account.

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

An equation showing the relationship among assets, liabilities, and owner’s equity.

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

Anything of value that is owned.

The use of ethics in making business decisions.

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

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

Interest paid on an original amount deposited in a bank plus any interest that has been paid.

A person or business to whom a liability is owed.

Someone who owns, operates, and takes the risk of a business venture.

Financial rights to the assets of a business.

The difference between assets and liabilities.

The principles of right and wrong that guide an individual in making decisions.

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

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

Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities.

An amount paid for the use of money for a period of time.

Language of business

An amount owed.

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

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

The difference between personal assets and personal liabilities.

A business owned by one person.

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

A sale for which payment will be received at a later date.

A business that performs an activity for a fee

1. The accounting equation is most often stated as Assets + Liabilities = Owner’s Equity.

After each transaction, the accounting equation must remain in balance.

A negative amount for net worth would reflect more debt than assets, something a creditor would favor.

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

Detailed information about changes in owner’s equity is needed by owners and managers to make sound business decisions.

When items are bought and paid for at a future date, another way to state this is to say these items are bought on account.

A transaction for the sale of goods or services results in a decrease in owner’s equity.

Keeping separate financial records for a business and for its owner’s personal belongings is an application of the Business Entity accounting concept.

An expense is a decrease in owner’s equity resulting from the operation of a business.

Business ethics are the principles of right and wrong that guide an individual in making decisions.

Payments for advertising, equipment repairs, utilities, and rent are liabilities.

Withdrawals are assets taken out of a business for the owner’s personal use.

When an owner withdraws cash from the business, the transaction affects both assets and owner’s equity.

A withdrawal is an expense.

The most common type of withdrawal by an owner from a business is the withdrawal of cash.