Accounting Chapter One Vocab

Endorsement – A signature or stamp on the back of a check transfering ownership
Expense – A decrease in owner's equity resulting from the operation of a business.
Cost Constraint – The cost constraint (or cost-benefit relationship) relates to the notion that the benefits to be derived from providing certain accounting information should exceed the costs of providing that information. The difficulty in cost-benefit analysis is that the costs and especially the benefits are not always evident or measurable.
*fees earned* – Revenue from providing services.
interest payable – current liab
Net Income appears on which financial statement(s)
A) Statement of retained earnings
B) Income statement
C) Balance sheet
D) Both A and B – D) Both A and B
Admin Expense – Secretary to the company president
How can a transaction affect only one side of the accounting equation? – If one account is increased, another account on teh same side of the equation must be decreased by the same amount.
Notes Payable – …Is a Credit balance account.
Post dated check – A check with a future date on it
An agency relationship can be formed without consideration.
What is Accounting? – -keeping financial records
-organizing financial information
-language of business
-analyzing and interpreting an organization's financial performance
-information required by owners, managers, investors, lenders, and the government
Special Endorsment – An endorsment indicating a new owner of a check
statement of owners equity – Reports beginning capital plus net income less withdrawals to compute ending capital
Buy on account – A common business practice in which business buy items and pay for them at a future date.
Vendor- – a business from which merchandise is purchased or supplies or other assets are bought.
net loss – difference between total revenue and expenses when total expenses is greater
An аgency relаtiоnship cаn be fоrmed withоut consideration.
Capital Lease – lessee essentially buys asset and borrows money through the lease to pay for the asset

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