Accounting Definitions

The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events which are of a financial character, and interpreting the results. ( defined by American Institute of Certified Public Accountants)

A record pertaining to a single item in the accounting equation that summarizes all the information about that item.

The name given to each account.

The amount in each account.

Any activity that occurs in the business that changes part of the accounting equation.

Everything of value owned and used in the business.

The amount owed.

The account used to summarize money owed.

The part of the business that belongs to the owner.

The account used to summarize owner’s equity.

The figures and categories of the accounts.

Assets = Liabilities + Owner’s Equity

Marking the total of a column in small writing beneath the last figure in that column.

The account title used for owner’s withdrawals.

The amount of money that a business earns for selling services or goods to another firm or individual.

The costs in money of any goods or services a business buys and uses to help it earn revenues.

The period for which a business summarizes and reports financial information. (Most businesses like to begin a new fiscal period at the first day of the month but it can be begin on any date.)

An eight column accounting form used to summarize the general ledger.

A Financial report that gives a detailed picture of the financial condition of a business as of a specific date. This statement includes only assets, liabilities, and owner’s equity accounts.

A financial report that provides management with information regarding the profit or loss for the last accounting period. This statement includes only revenue and expenses.

An entry made in the general journal to close a ledger account and transfer its balance to another account.