Key Accounting Terms: Account Numbers, Accounts, Accounts

School: American InterContinental University - Course: ACC 101 - Subject: Accounting

Chapter 1 Define the following key accounting terms: 1.Account numbers -The numbers assigned to accounts according to the chart of accounts. 2.Accounts - The categories under the Assets, Liabilities, and Owner's Equity headings. 3.Accounts Payable - A liability account used for short-term obligations or charge accounts, usually due within 30 days. 4.Accounts Receivable -An account used to record the amounts due from (legal claims against) charge customers. 5.Assets -Cash, properties, and other things of value owned by an economic unit or a business entity. 6.Backups -Procedures that store company data files in a safe place, such as online or on a flash drive. 7.Business entity - A business enterprise, separate and distinct from the persons who supply the assets it uses. 8.Capital - The owner's investment, or equity, in an enterprise. 9.Chart of Accounts -The official list of account titles to be used to record the transactions of a business. 10.Cloud computing -Software that is used via the Internet instead of from a local computer. Software and data can be accessed anywhere there is an Internet connection. 11.Computerized accounting system -An accounting system that records transactions using a computer and an accounting cloud-based application like QuickBooks Online.

12.Creditor -One to whom money is owed. 13.Double-entry accounting - The system by which each business transaction is recorded in at least two accounts and the accounting equation is kept in balance. 14.Equity - The value of a right or claim to or financial interest in an asset or group of assets. 15.Expenses -The costs that relate to earning revenue (the costs of doing business); examples are wages, rent, interest, and advertising. They may be paid in cash immediately or at a future time (Accounts Payable). 16.Fair market value -The present worth of an asset or the amount that would be received if the asset were sold to an outsider on the open market. 17.Fundamental accounting equation -(Assets = Liabilities + Owner's Equity) An equation expressing the relationship of assets, liabilities, and owner's equity. 18.Liabilities - Debts or amounts owed to creditors. 19.Manual accounting system - An accounting system in which transactions are recorded by hand. 20.Owner's equity -The owner's right to or investment in the business. 21.Revenues - The amounts a business earns; examples are fees earned for performing services, sales of merchandise, rent income, and interest income. They may be in the form of cash, credit card receipts, or Accounts Receivable (charge accounts). 22.Separate entity concept - The concept by which a business is treated as a separate economic or accounting entity. The business stands by itself, separate from its owners, creditors, and customers. 23.Sole proprietorship -A one-owner business.

24.Withdrawals -The taking of cash or other assets out of a business by the owner for his or her own use. (This is also referred to asdrawing.) A withdrawal is treated as a decrease in owner's equity.