"CLEP Financial Accounting," Vocabulary from Chapter 2

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25 words 40 learners

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Full list of words from this list:

words only definitions & notes
  1. assets
    anything of material value owned by a person or company
  2. balance
    the difference between the credit and debit of an account
  3. capital
    wealth in the form of money or property
  4. capitalize
    convert (a company's reserve funds) into assets
  5. creditor
    a person to whom money is owed by a debtor
  6. current
    occurring in or belonging to the present time
  7. liability
    an obligation to pay money to another party
  8. financial
    involving fiscal matters
  9. accounting
    a statement of recent transactions and the resulting balance
  10. fiscal
    involving financial matters
  11. liquid
    in cash or easily convertible to cash
  12. operate
    direct or control, as a project or business
  13. cycle
    an interval during which a recurring sequence occurs
  14. equity
    difference between value of a property and claims against it
  15. sole
    not divided or shared with others
  16. proprietor
    someone who owns a business
  17. principle
    a rule or standard especially of good behavior
    --Every transaction gets recorded twice: (1) where the money comes from, and (2) where it goes. This is called double entry accounting.
    --Financial statements report on the business entity, not the owner's personal wealth.
    --"Current" liabilities are those debts that must be paid within one year or business cycle, whichever is longer.
  18. formula
    a statement expressing some fundamental principle
  19. basic
    serving as a base or starting point
  20. equation
    a mathematical statement that two expressions are the same
    assets = liabilities + owner's equity
    owner's equity = assets - liabilities
    liabilities = assets - owner's equity
  21. entity
    that which is perceived to have its own distinct existence
  22. ratio
    the relative magnitudes of two quantities
  23. debt
    money or goods or services owed by one person to another
  24. entry
    a written record of a commercial transaction
  25. clue
    evidence that helps to solve a problem
    --Make a flash card for all words you do not know.
    --Every time you see the word "payable," the CLEP exam is talking about a liability.
    --If given a debt or equity ratio on the CLEP test, subtract that number from 100% to quickly find the other.
Created on November 2, 2016 (updated December 13, 2016)

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