Summary Accounting – Chapter 1 Overview | Key Terms and Definitions | Introduction to Financial Principles

Accounting - Chapter 1

accounting ✔✔planning, recording, analyzing, and interpreting financial information

accounting system ✔✔a planned process for providing financial information that will be useful
to management

accounting records ✔✔organized summaries of a business's financial activities

financial statements ✔✔financial reports that summarize the financial condition and
operations of a business

service business ✔✔a business that performs an activity for a fee

proprietorship ✔✔a business owned by one person

asset ✔✔anything of value that is owned

equities ✔✔financial rights to the assets of a business

liability ✔✔an amount owed by a business

owners equity ✔✔the amount remaining after the value of all liabilities is subtracted from the
value of all assets

accounting equation ✔✔an equation showing the relationship among assets, liabilities, and
owner's equity

ethics ✔✔the principles of right and wrong that guide an individual in making decisions

business ethics ✔✔the use of ethics in making business decisions

transaction ✔✔a business activity that changes assets, liabilities, or owner's equity

account ✔✔a record summarizing all the information pertaining to a single item in the
accounting equation