Accounting Basics

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Accounting

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keeping records of all financial transactions related to an individual

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Accounting system

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compile financial data, summarize the results in accounting records and reports

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financial statements

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financial reports that summarize the financial conditions and operations of a business

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Net Worth Statement

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A financial report that shows what an individual owns and owes

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Personal Net Worth

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The difference between personal assets and personal liabilities

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GAAP

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Generally Accepted Accounting Principles

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Equities

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financial rights to the assets of a business

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Accounting equation

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Assets = Liabilities - Owner's Equity

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Transaction

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any business activity that changes Assets, Liabilities, or Owner's Equity

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Account balance

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the difference between increases and decreases in an account