Chapter 1 Vocabulary

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  1. Account Numbers
    The numbers assigned to accounts according to the chart of accounts.
  2. Accounts
    The categories under the Assets, Liabilities, and Owner's Equity headings.
  3. Accounts Payable
    A liability account used for short-term obligations or charge accounts, usually due within 30 days.
  4. Accounts Receivable
    An account used to record the amounts due from (legal claims against) charge customers. (p. 27)
  5. Assets
    Cash, properties, and other things of value owned by an economic unit or a business entity. (p. 13)
  6. Business Entity
    A business enterprise, separate and distinct from the persons who supply the assets it uses. (p. 13)
  7. Capital
    The owner’s investment, or equity, in an enterprise. (p. 13)
  8. Chart of Accounts
    The official list of account titles to be used to record the transactions of a business. (p. 22)
  9. Creditor
    One to whom money is owed. (p.14)
  10. Double-Entry Accounting
    The system by which each business transaction is recorded in at least two accounts and the accounting equation is kept in balance. (p. 17)
  11. Equity
    The value of a right or claim to or financial interest in an asset or group of assets. (p. 13)
  12. Expenses
    The costs that relate to earning revenue (the costs of doing business); examples are wages, rent, interest, and advertising. They may be paid in cash immediately or at a future time (Accounts Payable). (p. 21)
  13. Fair Market Value
    The present worth of an asset or the amount that would be received if the asset were sold to an outsider on the open market. (p. 19)
  14. Fundamental Accounting Equation (Assets 5 Liabilities 1 Owner’s Equity)
    An equation expressing the relationship of assets, liabilities, and owner’s equity. (p. 14)
  15. Liabilities
    Debts or amounts owed to creditors. (p. 14)
  16. Owner’s Equity
    The owner’s right to or investment in the business. (p. 13)
  17. Revenues
    The amounts a business earns; examples are fees earned for performing services, sales of merchandise, rent income, and interest income. They may be in the form of cash, credit card receipts, or accounts receivable (charge accounts). (p. 21)
  18. Separate Entity Concept
    The concept by which a business is treated as a separate economic or accounting entity. The business stands by itself, separate from its owners, creditors, and customers. (p. 16)
  19. Sole Proprietorship
    A one-owner business. (p. 16)
  20. Withdrawal
    The taking of cash or other assets out of a business by the owner for his or her own use. (This is also referred to as drawing.) A withdrawal is treated as a decrease in owner’s equity. (p. 30)
Card Set:
Chapter 1 Vocabulary
2014-01-26 21:01:09
ACCT 101

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