Accounting - Glossary Flashcards
1
Q
a device for recording the changes (increase or decreases) in the fundamental accounting elements
A
account
2
Q
one who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports
A
accountant
3
Q
the difference between the total debits and the total credits in an account
A
account balance
4
Q
a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data
A
accounting
5
Q
the process involved in journalizing, posting to the ledger, taking a trial balance, preparing statements, making adjusting and closing entries, and preparing a post - closing trial balance
A
accounting cycle
6
Q
assets equal liabilities plus owner’s equity
A
accounting equation
7
Q
an unwritten promise to pay creditors for property, such as merchandise, supplies, or equipment, purchased on credit, or for services received on credit
A
accounts payable
8
Q
an unwritten promise by a customer to pay, at a later date, for goods sold or services rendered
A
accounts receivable
9
Q
measures how many times per year receivables are collected
calculation: net credit sales divided by average accounts receivable
A
accounts receivable turnover
10
Q
(beginning accounts receivable + ending accounts receivable) divided by 2
A
average accounts receivable
11
Q
recording in each fiscal period applicable expenses, whether paid or not, and income earned, whether collected or not
A
accrual accounting
12
Q
an expense incurred in operating a business during an accounting period, but not yet paid
A
accused expense
13
Q
income actually earned during an accounting period but which will not be received until a future period
A
accrued income
14
Q
test ratio (quick ratio) - quick assets dived by current liabilities
A
acid
15
Q
measures how efficiently a firm is utilizing its assets
A
activity analysis
16
Q
a trial balance taken after adjusting entries have been recorded
A
adjusted trial balance
17
Q
entires made at the conclusion of a fiscal period to bring accounts up to date
A
adjusting entries
18
Q
measures the average time required to collect receivables
calculation: 365 days divided by accounts receivable turnover
A
age of accounts receivable
19
Q
measures the average time required to sell inventory
calculation: 365 days divided by inventory turnover
A
age of inventory
20
Q
a contra-asset account utilized to accumulate totals against accounts receivable
A
allowance for bad debts (allowance for doubtful accounts)
21
Q
property of monetary value owned by a business
A
assets
22
Q
accounts receivable that are uncollectible
A
bad debts expense (uncollectible accounts expense; loss of uncollectible accounts)
23
Q
a formal financial statement illustrating the assets, liabilities, and owner’s equity of a business as of a specific date
A
balance sheet (statement of financial position; statement of financial condition)
24
Q
express the major items in the balance sheet as a percent of the total assets and compare with previous fiscal periods
A
balance sheet common - size statements/percentage method
25
record the balance sheet data for two or more comparable periods on the same form so that the information can be readily compared
balance sheet comparative forms
26
a method of computing interest based on the assumption that there are 360 days in a year
banker's method / 360 day method
27
an itemized listing prepared by the bank of additions to the subtractions from a depositor's account
bank statement
28
the process by which the depositor attempts to reconcile the bank statement balance with the checkbook balance
bank statement reconciliation
29
one who is involved in the process of recording financial information in a prescribed manner
bookkeeper (information processor)
30
the recording of financial information in a prescribed manner
bookkeeping
31
the cost of a fixed asset less its accumulated depreciation
book value (undepreciated cost)
32
the first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.
business papers (source documents)
33
a twelve-month period beginning January 1st and concluding on December 31st
calendar year
34
a check which has been paid by the bank and returned to the drawer for recordkeeping
cancelled check
35
the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business
capital (net worth; owner's equity; proprietorship)
36
coins, currency (paper money), checks, credit card receipts and money orders received from others, as well as money deposited in the bank
cash
37
an accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid
cash basis accounting
38
discounts from quoted prices as an inducement for prompt payment of invoices
cash discounts
39
money and money substitutes paid
cash disbursements (cash payments)
40
a special ledger account that is used to keep track of unexplained shortages or overages of cash
cash short and over
41
an individual possessing a college education, having practical experience in accounting, and who has passed a comprehensive state examination in order to be certified to practice public accounting in that state
Certified Public Accountant / CPA
42
a list of all the account titles and the account numbers assigned to them
chart of accounts
43
a piece of commercial paper drawn on funds in a bank account and payable on demand
checks
44
a form on which information is recorded by the drawer of a check concerning the check drawn; a source document
check stub
45
in accounting, to record in order of time
chronological
46
the sorting of the many business transactions in an orderly and systemic manner
classifying
47
entries made at the end of each reporting period to transfer the balances of the temporary owner's equity accounts to the permanent owner's equity account and to reduce the balance in the temporary owner's equity accounts to zero in preparation for the next accounting period
closing entries
48
an accounting entry that involves more than two accounts
compound journal entry
49
an account designed to accumulate to accumulate totals to offset a related account
contra account
50
the abbreviation for credit
cr.
51
the right side of a standard account
credit
52
a condition that occurs when the total of the credits in an account is larger than the total of the debits in that account
credit balance
53
a source document that grants credit to a buyer for purchase return or purchase allowance; items the bank adds to the account balance
credit memorandum
54
a business or individual to whom a debt is owed
creditor
55
current assets divided by current liabilities
current ratio
56
cash of other assets that will be converted into cash or consumed within one year
current assets
57
debts of a business that are generally paid within one year
current liabilities
58
the committing of a business transaction and the events surrounding such into writing
data entry (recording)
59
the left side of a standard account
debit
60
a condition that occurs when the total of the debits in an account is larger than the total of the credits in that account
debit balance
61
items the bank deducts from the account balance
debit memorandum
62
the business or individual who owes a debt
debtor
63
deposits that have been made and added to depositor's checkbook, but have not yet been listed on the bank statement
deposits in transit
64
a bank form that lists those cash items (currency and coin) and individual checks to be deposited
deposit slip (deposit ticket)
65
the loss in value of a fixed asset due to wear and tear and the passage of time; or, a method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life
depreciation
66
that portion of the original cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from its use
depreciation expense
67
a payment
disbursement
68
a specific number of days during which a discount is available if the account if paid
discount period
69
a check not paid by the bank when properly presented
dishonored check
70
the process of recording equal debits and credits for a single business transaction
double entry accounting (double entry bookkeeping)
71
the abbreviation for debit
dr.
72
a separate owner's equity account in which withdrawals of cash or other assets by the owner for personal use are recorded
drawing account (owner withdrawals)
73
one who is under the control and direction of an employer with regard to the performance of employment
employee
74
end of month abbreviation
E.O.M.
75
a decrease in assets, other than withdrawals by the owner, which results from efforts to produce revenues
expenses
76
the principal sum the maker of a note promises to pay
face of note
77
the amount that an employer must withhold from an employee's pay for income tax purposes
federal income tax withholding
78
a federal act that requires most employers and employees to pay taxes to support the federal social security program
federal insurance contributions act (FICA)
79
a federal act imposed upon each employer for financing the administration costs of the federal and state unemployment compensation programs
federal unemployment tax act / FUTA
80
a period of time covered by an income statement
fiscal period
81
property of a relatively permanent nature used in the operation of a business and not intended for resale
fixed assets (long-term assets)
82
liabilities that are not due and payable within one year
fixed liabilities (long-term liabilities)
83
a book of original entry in which any business transaction is recorded in chronological order
general journal
84
the book of accounts
general ledger
85
income before any deductions have been made
gross earnings (gross pay)
86
net sales minus the cost of goods sold
gross margin (gross profit)
87
gross profit divided by net sales
gross profit percentage
88
a condition in which the total of the debits and the total of the credits are equal in an account
in balance
89
an inflow of assets as a result of selling a product or providing a service
income (revenue)
90
a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period
income statement (profit and loss statement; statement of operations; operating statement)
91
express the major items in the income statement as a percent of net sales and compare with previous fiscal periods
income statement common - size statements/percentage method
92
record the income statement data for two or more comparable periods of the same form so that the information can be readily compared
income statement comparative forms
93
a tax levied on the earnings of individuals and businesses by federal, state, and local governments
income tax
94
any person who agrees to perform a service for a fee and who is not subject to the control of those for whom the service is performed
independent contractor
95
those assets that cannot be touched or grasped (examples include patents, copyrights, and goodwill)
intangible assets
96
money paid for the use of money
interest
97
explaining the significant events of developments that occur, usually taking the form of analysis and comparisons
interpreting
98
goods purchased for resale at a profit
inventory (merchandise)
99
the number of times the average in inventory has been sold or use up (turned over) during a period
calculation: cost of goods sold for period divided by average inventory
inventory turnover
100
(beginning inventory + ending inventory) divided by 2
average inventory
101
a source document showing quantity, description, prices of items, total amount of purchase and the terms of payment
invoice
102
any book of original entry
journal
103
the process of recording business transactions in a book of original entry
journalizing
104
a book of accounts in which data from transactions recorded in journals are posted and thereby summarized
ledger
105
any debts that a business owes
liabilities
106
measures the ability of a firm to meet its current obligations
liquidity analysis
107
the date on which payment is due on a promissory note
maturity date
108
a long-term liability; a written promise that pledges real property as security for payment of a debt
mortgage payable
109
gross pay less payroll deductions; an employee's take home pay
net earnings (net pay; take home pay)
110
the difference between gross profit and expense when gross profit is larger
net income (net profit)
111
the difference between gross profit and expenses when expenses are larger
net loss
112
purchases minus purchases returned and allowances minus purchase discounts
net purchases
113
sales minus sales returns and allowances minus sales discounts
net sales
114
a written promise to pay a creditor a certain amount in the future
notes payable
115
a written promise of a customer to pay the business a sum of money at a future date
notes receivable
116
expenses incurred in the normal operation of a business
operating expenses (overhead)
117
the amount originally paid for a depreciable asset
original cost basis
118
expenses incurred that are not the direct result of regular trading activities of a business
other expenses
119
income received that is not the direct result of regular trading activities of a business
other income
120
checks that have been drawn and subtracted from the depositor's checkbook, but which have not yet been presented to the bank for payment
outstanding checks
121
the issuance of a check without sufficient funds in the account when it is presented for payment
overdraft
122
accounts that accumulate information across accounting periods; all accounts reported on the balance sheet
permanent accounts
123
a fund of currency and coin established for the payment of small amounts of money
petty cash fund
124
a form used to reflect payments from the petty cash fund
petty cash voucher
125
a work paper prepared after all temporary owner's equity accounts have been closed and all permanent accounts have been balanced and ruled, proving the equality of the debits and credits
post-closing trial balance
126
a check dated subsequent to )following) its date of issuance
postdated check
127
the transferal of data from the journal to the ledger
posting
128
items which are considered to be assets when acquired, but which will become expenses when consumed or expired
prepaid expenses
129
the face value of a promissory note upon which interest is computed
principal
130
provides evidence concerning the earnings potential of a company and how effectively the firm is being managed
profitability analysis
131
net income divided by net sales
profit margin
132
a written promise made by a person or business to pay a certain sum of money to another person or business at a specified time in the future
promissory note
133
the process of determining whether the amount of cash, both on hand and in the bank, is the same as that which is indicated in the accounting records
proving cash
134
a source document prepared by the seller listing the items shipped, their cost and the method of shipment (from the buyer's viewpoint)
purchase invoice
135
a written order by a buyer for merchandise or other property specified in the purchase requisition
purchase order
136
a form used to request the responsible person or department to purchase merchandise or other property
purchase requisition
137
a temporary owner's equity account used to record the buying of merchandise for resale
purchases
138
a temporary owner's equity contra purchases account used to record discounts taken on inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices
purchases discounts
139
a temporary owner's equity contra purchases account utilized to record the return of merchandise to the manufacturer or supplier as the result of material defects in workmanship and/or inferior product quality
purchases returns and allowances
140
a three-month period
quarterly
141
cash, marketable securities, accounts, and notes receivable
quick assets
142
the annual percentage rate used to compute interest
rate
143
a tax imposed on tangible personal property sold at retail
retail sales tax
144
generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year
salary
145
a temporary owner's equity account used to record the earnings of revenue
sales
146
a temporary owner's equity contra sales account used to record discounts given to customers as an incentive for prompt payment
sales discounts
147
a source document prepared by the seller that lists the items shipped, their cost and the method of shipment (from the seller's viewpoint)
sales invoice
148
a temporary owner's equity contra sales account used to record credit given to a customer for shortages or damaged goods
sales returns and allowances
149
the estimated value of a fixed asset at the end of its useful life
salvage value
150
a report sent to each customer, usually at the end of the month, which indicates the status of his or her account
statement of account
151
a formal financial statement which summarizes all of the changes in owner's equity during a specified period of time
statement of net worth (statement of owner's equity)
152
an order by a depositor requesting a bank not to pay on a check previously issued
stop payment order
153
a method in which the depreciable cost basis (original cost basis less salvage value) of an asset is apportioned equally over its estimated useful life expressed in terms of month or years
straight-line depreciation
154
bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements
summarizing
155
a type of asset that will be consumed as it is used (ex: embalming supplies and office supplies)
supplies
156
a skeleton form of an account used for instructional purposes
T account
157
those assets that can be appraised by value or seen or touched
tangible assets
158
accounts utilized to accumulated income, expenses, and owner's withdrawals for one accounting period only
temporary owner's equity accounts
159
the period of time from the date of the note to the maturity date
term of note (time)
160
any activity of a business enterprise that involves the exchange of values
transaction
161
the effect of business activities on the accounting elements
transaction analysis
162
an amount written within the digits in incorrect order
transposition error
163
a work paper proving the equality of the debit and credit balances in the ledger
trial balance
164
the estimated determinable life of a fixed asset
useful life
165
wage and tax statement; a report furnished by the employer for each employee indicating gross earnings and deductions
W-2 form
166
employee's withholding allowance certificate
W-4 form
167
a form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks, or pieces completed
wage
