Term
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Definition
| Planning, records, and interpreting financial information. |
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Term
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Definition
| A planned process for providing financial information that will be useful to management. |
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| Organized summaries of a business's financial activities. |
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Definition
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| Inaccurate accounting records. |
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Definition
What often contributes
to business failures or banking top? |
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Term
| A business that performs an activity for a fee |
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Definition
| What is a service business? |
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Term
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Definition
| Organized summaries of a business's financial activities. |
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Term
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Definition
| A business that performs an activity for a fee |
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Term
| A business owned by one person. |
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Definition
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| Anything of value that is owned |
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Definition
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Term
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Definition
| Financial rights to the assets of a business |
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Term
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Definition
| An amount owned by a business\ |
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Term
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Definition
| The amount remaining after the value of all liabilities is subtracted from the value of all assets |
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| An equation showing the relationship among assets, liabilities, and owners equity |
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Definition
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Term
| What is important to remember? |
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Definition
| The accounting equation must be in balance to be correct. Thus, the total of the amounts on the left side of the equation must always equal the total of the equation must always on the right side . |
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Term
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Definition
| A financial statement that reports assets, liabilities, and owner's equity on a specific date. |
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Term
| What are the major section of the balance sheet? |
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Definition
1. Assets are on the left side of the accounting equation.
2. Liabilities are on the right side of the accounting equation.
3. Owner's equity is also in the right side of the accounting equation. Therefore, Encore Music lists its owner's equity on the right side of the balance sheet. |
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Term
| v What are the steps to prepare a balance sheet? |
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Definition
1. Write the heading centered on the three lines at the top of the balance sheet: the name of the business, the name of the reporter and the date of the report.
2. Because assets are on the on the LEFT side of the accounting equation, prepared the assets section on the LEFT side. Center the word Assets on the first line of the wide column. Under this heading, write each assets account title and amount.
3. Prepared the liabilities section. Center the word liabilities on the first line of the wide column on the right. Under this heading, write each liability account and amount.
4. Prepared the owner's equity section on the RIGHT side. Center the word Owner's Equity on the next blank line. Under this heading, write each owner's equity account title and amount.
5. Add all the assets amounts. Add the liabilities and owner's equity amount. If the totals, equal the balance sheets is in the balance (correct).
6. Rule a single line across each amount column. A single line means that amount are to be added or subtracted.
7. On the next line on the left side, write Total Assets and write the total assets amount under the single rule. On the right side, write Total Liabilities and Owner's Equity and write the total liabilities and owner's equity amount under the single rule.
8. Rule double lines below the amount column totals. Double rules mean that the total have been verified as correct. |
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