Accounting 11/12

Accounting Key Terms

Accounting is the language of business. It includes planning, recording, analyzing and interpreting financial information.
Financial reports – statements of the financial conditions and operations of a business.
“the books”
Asset – anything of value that is owned.
Liability – an amount owed by a business.
Owner’s Equity – the amount remaining after the value of all liabilities is subtracted from the value of all assets. (net worth – what the owner has invested in the business)
Transaction – any business activity that changes assets, liabilities or owner’s equity.

ACCOUNTING EQUATION

Assets = Liabilities + Owner’s Equity

Sample balance sheet

 

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