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Glossary of Accounting Unit 1

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What is the Accounting Equation?
Assets = Liabilities + Owner's Equity
What is an Asset?
Resources that are owned by a business.
What is a Liability?
Debts that are owed to creditors by a business
What is Owner's Equity?
The rights of the owner to the business assets.
What is an Accounts Payable?
Purchases by a business on account.
What are Prepaid Expenses?
Items such as supplies tha will be used by the business in the near future. They are assets.
What is Revenue?
Increases in owners equity as a result of selling services or products to customers.
What is an Accounts Recievable?
Debts that are owed to a business by customers.
What is an Expense?
The amounts used in earning revenue. Expenses include supplies used, wages.
What is an Income Statement?
A summary of revenue and expenses for a specific period of time. End of month or year.
What is a Statement of Owner's Equity?
A summary ofthe changes in the owner's equity that have occured during a period of time.
What is a Balance Sheet?
A list of assets,liabilities and owner's equity as of a specific date.
What is the ratio of liabilities to owner's equity?
Total Liabilities/Total Owner's Equity
What is a Ledger?
A group of accounts for a business entity.
What is a Chart of Accounts?
A list of accounts in the ledger.

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