Accounting Basics

Accounting

• keeping records of all financial transactions related to an individual

• what you owe

• financial information

Accounting system

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

• information that must be documented

• language of business

financial statements

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

• is a planned process to compile financial data

• what you earn in total

Net Worth Statement

• A financial report that shows what an individual owns and owes

• language of business

• amounts owed to friends and family

Personal Net Worth

• The difference between personal assets and personal liabilities

• financial reports

• a formal report that shows what an individual owns and owes

GAAP

• Generally Accepted Accounting Principles

• Generally

  Accepted

  Accounting

  procedures

• I don't know

Equities

• financial rights to the assets of a business

• the relationship between assets, liabilities, and owner's equity

• the name given to a account

Accounting equation

• Assets = Liabilities - Owner's Equity

• Liabilities - Assets = Owners Equity

• I don't know

Transaction

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

• the name given to an account

• the difference between an increase and decrease

Account balance

• the difference between increases and decreases in an account

• a record that summarizes all transactions

• an account used to summarize the owner's equity in a business