Accounting 1

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Owners' (shareholders') equity

Back 1

the owners' right to the assets of the business

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dividends

Back 2

Distributions to the owners (stockholders) of a corporation

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prepaid expenses

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items such as supplies that will be used in the business in the future

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proprietorship

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a business owned by one individual

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revenue

Back 5

Increases in owner's eqwity as a result of selling services or products to customers

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Statement of owners' equity

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Represents a summary of the changes that occurred in the entity’s owners equity during a specific time period, such as a month or a year. Increases to owners equity arise from investments by the owner and from net income earned during the period. Decreases result from owner withdrawals and from a net loss for the period. Net income or net losses come directly from the income statement, and owner investments are capital transactions between the business and its owner, so they do not affect the income statement.

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Account

Back 7

an accounting form that is used to record the increases and decreases in each financial statement item

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Balance of an account

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The amount of the difference between the debits and the credits that have been entered into an account

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Credit

Back 9

Amounts entered on the right side of an account

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Debit

Back 10

Amounts entered on the left side of an account

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General Ledger

Back 11

The primary ledger, when used in conjunction with subsidiary ledgers, that contains all of the balance sheet and income statement accounts

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Horizontal Analysis

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Financial analysis that compares an item in a current statement with the same item in prior staements; the percentageof increases and decreases in corresponding items in comparative financial statements

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Journal

Back 13

The initial record in which the effects of a transaction are recorded

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Journal Entry

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the form of recording a transaction in a journal

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Posting

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The process of transferring the debits and credits from the journal entries to the accounts

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Slide error

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An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20, or $5420.00

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Transposition error

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An error in which the order of the digitsis changed, such as writing $542 as $452

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Trial balance

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A summary listing of the titles and balances of accounts in the ledger

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Unearned revenue

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The liability created by receiving revenue in advance

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Vertical analysis

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An analysis that compares each item in a current statement with a total amount within the same statement; the percentage analysis of component parts in relation to the total of the parts in a single financial statement