1. Account 1-2

2. Learning Goal  Classify accounts as assets, liabilities, or equity  Analyze the effects of transactions on the accounting equation  Distinguish between cash and on account transactions

3. Terms  Service Business-A business that performs an activity for a fee  Proprietorship-is a business owned by one person(unlimited liability)  Rule of 72- length of time it takes money to double at a set interest rate (72 / 6 = 12 years)  Gaap (gap) Standards and rules that accountants follow

4.  Equities-financial right to the assets of a business  2 types of equities  1 st equity of those to whom money is owed  2 nd equity of the owner  Accounting equation Assets = Liabilities + Owner’s Equity  Totals on the left must = totals on the right

5. Terms  Transaction-a business activity that changes the accounting equation  Account- a single item in the accounting equation  Account title-name given to an account (cash)  Account balance-the difference between the increase and decreases in an account  Capital account-an account used to summarize the owner’s equity(Michael Delgado, Capital)  Creditor-a person or business to whom a liability is owed