Chapter One Vocabulary

Assets = Liabilities + Owner’s Equity Asset – anything of value that is owned Liability – an amount owed by a business Owner’s Equity – the amount remaining after the value of all liabilities is subtracted from assets The accounting equation: Assets = Liabilities + Owner’s Equity Must ALWAYS be in balance. The total of the amounts on the left side must always equal the total of the amounts on the right side.

Assets = Liabilities + OE. 3,000 8,000 10,000. 6,000 63,000 35,000

Transaction – a business activity that changes assets, liabilities, or owner’s equity Account – a record summarizing all the information pertaining to a single item in the accounting equation Account Title – the name given to an account Account balance – the amount in an account Capital – the account used to summarize the owner’s equity Complete transactions 1-5 as a class.

Revenue – an increase in OE Sale on Account – a sale for which cash will be received at a later date Expense – a decrease in OE Withdrawals – assets taken out of a business for the owner’s personal use Complete transactions 6-11 together.