Questions and Answers
What is an account?
What is account balance?
The difference between the increases and decreases in an account.
What is the account title?
The name given to an account.
What is accounting?
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What is the accounting equation?
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What is an accounting system?
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What is an asset?
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What are business ethics?
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What is a business plan?
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What is a capital account?
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Who is a creditor?
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What are equities?
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What is equity?
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What are ethics?
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What is an expense?
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What are financial statements?
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What does GAAP stand for?
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What is a liability?
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What is a net worth statement?
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What is owner's equity?
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What is personal net worth?
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What is a proprietorship?
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What is revenue?
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What is a sale on account?
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What is a service business?
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What is a transaction?
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What is a withdrawal?
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Study Notes
Accounting Fundamentals
- An account summarizes transactions related to a specific item in the accounting equation.
- Account balance represents the net difference between increases and decreases in an account.
- Account title refers to the designated name of an account.
Accounting Process and Systems
- Accounting involves planning, recording, analyzing, and interpreting financial data.
- The accounting equation illustrates the relationship between assets, liabilities, and owner's equity.
- An accounting system is a structured method for compiling financial data and summarizing results in reports.
Key Financial Concepts
- An asset is any valuable item owned by an entity.
- Business ethics apply moral principles to business decision-making.
- A business plan is a written document outlining a business's nature and operational strategy.
- The capital account summarizes the owner's equity in a business.
Financial Obligations and Rights
- A creditor is an entity owed money or an obligation.
- Equities signify financial rights associated with a business's assets.
- Equity is calculated as the difference between total assets and total liabilities.
- Ethics guide right and wrong decision-making processes.
Operational Costs and Financial Reporting
- An expense is related to costs incurred for goods or services in running a business.
- Financial statements detail a business's financial status and operations.
- GAAP stands for Generally Accepted Accounting Principles, dictating standards for financial recording and reporting.
Liabilities and Personal Financial Position
- A liability denotes any amount owed to external parties.
- A net worth statement reports individual assets, liabilities, and their difference.
- Owner's equity is the residual amount after deducting liabilities from total assets.
- Personal net worth evaluates the difference between personal assets and liabilities.
Business Ownership Models
- A proprietorship refers to a business owned by a single individual.
- Revenue represents increases in equity from selling goods or services.
- A sale on account indicates a transaction where payment is due at a future date.
- A service business provides paid activities rather than goods.
Transaction and Withdrawal Definitions
- A transaction constitutes any business action affecting assets, liabilities, or equity.
- A withdrawal involves assets taken for the owner's personal use.
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Description
Test your knowledge of key terms from Accounting Chapter 1 of Cengage. This quiz covers important concepts such as accounts, balances, and account titles. Perfect for students looking to reinforce their understanding of foundational accounting principles.