Chapter 1-1
Chapter 1-2
1. Accounting-Planning, recording analyzing, and interpreting financial
information.
1. Transaction-A business activity that changes assets, liabilities, or
owner’s equity.
2. Financial Statements-Financial reports that summarize the financial
condition and operations of a business.
2. Account-A record summarizing all the information pertaining to a
single item in the accounting equation.
3. Service Business-A business that performs an activity for a fee.
4. Proprietorship-A business owned by one person.
a. Advantagesb. Disadvantages5. Asset-Anything of value that is owned.
6. Equities-Financial rights to the assets of a business.
7. Liability-An amount owed by a business.
8. Owner’s Equity-The amount remaining after the value of all
liabilities is subtracted from the value of all assets.
9. Accounting Equation:
Assets = Liabilities + Owner’s Equity
10. Ethics-The principle of right and wrong that guide an individual in
making decisions.
11. Business Ethics-The use of ethics in making business decisions.
3. Account Title-The name given to an account.
4. Account Balance-The amount in an account.
5. Capital-The account used to summarize the owner’s equity in a
business.
Chapter 1-3
Chapter 2-1
1. Revenue-An increase in owner’s equity resulting from the
operation of the business.
1. T Account-An accounting device used to analyze transactions.
2. Sale on Account-A sale for which cash will be received at a later
date.
3. Credit-An amount recorded on the right side of the T Account.
2. Debit-An amount recorded on the left side of the T Account.
4. Normal Balance-The side of the account that is increased.
5. Chart of Accounts-A list of accounts used by a business.
3. Expense-A decrease in owner’s equity resulting from the
operation of the business.
4. Withdrawals- Assets taken out of a business for the owner’s
personal use.