Accounting Chapter 2: The World of Business and Accounting

Legal permission to operate.

Money that investors, banks, or business owners supply for a business to begin.

A business recognized by law to have a life of its own.

A business that provides needed service for a fee.

When a business spends more money than it earns.

The accounting assumption that a business is expected to operate indefinitely.

A person who transforms ideas for products or services into real-world businesses.

The amount of money earned over and above the amount of money spent.

When accounting information is processed by recording it into a computer.

A business that buys finished products and resells them to individuals or other businesses.

Accounting that focuses on reporting information to management; called accounting for internal users of accounting info.

The type of accounting that focuses on reporting information to external users.

When accounting information is processed by hand.

The activies that a person does well. Related to the profit and loss of a business entity.

Designed to collect, document, and report on financial transactions affecting the business.

The period of time covered by an accounting report.

(Generally Accepted Accounting Principles): The set of rules that all accountants use to prepare financial reports.

A business owned by two or more persons.

Accounting assumption that a business exists independently of its owner’s personal holdings. Money maintained seperately

Business that buys raw materials, uses labor and machinery to turn it into products, and sells the final product.

Documents that present summarized information about the financial status of a business.

A business owned by one person.