Planning, recording, analyzing, and interpreting financial information.

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

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

A planned process for providing financial information that will be useful to management.

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

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

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

A record summarizing all the information pertaining to a single item in the accounting equation.

The difference between personal assets and personal liabilities.

Anything of value that is owned.

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

Assets taken out of a business for the owner’s personal use.

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

A business owned by one person.

The use of ethics in making business decisions.

A business that performs an activity for a fee.

The difference between assets and liabilities.

Financial reports that summarize the financial conditions and operations of business.

An amount owed by a business.

A person or business to whom a liability is owed.

A decrease in owner’s equity resulting from the operation of a business.

An increase in owner’s equity resulting from the operation of a business.

The amount in an account.

The name given to an account.

Financial rights to the assets of a business.

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

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.

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

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

A withdrawal is an expense.