Karma is one of the most important concepts in Buddhism. Karma is an imprint in one's Mind. When one performs a good deed out of good intentions, the good intentions come from the Mind. Having done that good deed, the residues of these intentions stay in one's Mind as "imprints", and that is "good karma". The opposite goes for evil deeds (or what the Buddha would call "unwholesome deeds") done out of greed, hatred etc. A person's karma affects a person in 2 ways. The first is his disposition. If a person is an angry one, performing many deeds with anger, his mind will be imprinted with experiences and intentions of anger. Because of this imprint, in a similar situation, he would be more likely to feel angry. In a sense, the imprint creates and reinforces a sort of mental habit that causes a person's mind to react in a certain pre-disposed way. The second and more important way karma affects a person is by affecting his experience. Our experiences, our feelings of joy or sufferings, come mainly from our reaction to perceptual inputs. Taking our angry guy as an example, in many situations, he feels offended, angry and that seriously affects his state of mind. He often feels the pain of anger, very little peace. But if that person practices meditation, develops his mind, etc, such that he develops peace and love. He may live the same life all over and he may not experience the anger or the pain of anger etc in those same situations. In a sense, his karma is one of the main determinants of his experiences. In this sense too, we may say that our sufferings comes from our karma and our states of mind. The underlying factor in the formation of Karma is Intentions. What gets imprinted into one's mind is largely decided by one's intentions. If I accidentally stepped on a spider, for example, squashing it to death, and let's say I didn't even notice, there was no intention, how can there be an imprint into my mind? But if say I stepped on it out of "fun", the desire to cause harm now gets imprinted. In later life, I may become less sensitive to the value of life, I may be bothered by this experience, I may find myself more likely to be hateful, etc. That, friend, would be my karma. In a similar way, let's say I lost $20 while touring the slumps of India. The money is nothing to me, so I won't even notice. But somebody found the money and fed his family for a month, saving a dying child's life. If I wasn't even aware that I lost the money, how can there be good karma for me? (This concept of Karma was one of the main differences between the teachings of Buddhism and Jainism. Mahavira Jain taught that all actions, intentional or not, creates karma. The Buddha, speaking from his insights into the mind, taught that the Intention plays the deciding role. From my experience as a mediator, I verified Buddha's position for myself.)
Intention is a major part of Karma. If you come home and accidentally trip over the dog and hurt the animal, this is not intended and has no effect. However, after a hectic day, you come home and kick the poor dog, then negative Karma is generated. All the combined intended actions add up to what you are now. The Buddha saw this as an explanation of the different circumstances that all living beings find themselves in. Karma is closely linked with dependant origination, where it is the consequence of the law of cause and effect. In the Bible, it says that we reap what we sow, and karma has the same impact. Obviously, we also are subject to non-karmic forces such as the ageing of our bodies. And there are circumstances, which are natural and also affect our lives. But in addition to that, the Buddha said that we are subject to this karmic effect where the ethical actions and thoughts we have will have a positive effect on the future and on our spiritual development. In the book "Glimpse After Glimpse" by Soygal Rinpoche , the Buddha is quoted as saying: "Do not overlook negative actions merely because they are small; however small a spark may be, it can burn down a haystack as big as a mountain." And the Buddha also said "Do not overlook tiny good actions, thinking they are of no benefit; even tiny drops of water in the end will fill a huge vessel." In the West, we often associate Karma with fate and it has this idea of a future which is predetermined. In Buddhism, Karma is the reaping of past actions, but also offers the possibility of determining our own future with our actions and thoughts today. This means that no future event is locked in, and what happens today and tomorrow will create the personal and global world of the future.