Condensed Accounting

Question 1

Gross margin/gross profit

Answer 1

Net sales minus the cost of goods sold

Question 2

General ledger

Answer 2

The book of accounts

Question 3

General Journal

Answer 3

A book of original entry in which any business transactions is recorded in chronological order

Question 4

Fixed liabilities/long-term liabilities

Answer 4

Liabilities that are not due and payable within one year

Question 5

Fixed assets/long-term assets

Answer 5

Property of a relatively permanent nature, used in the operation of a business and not intended for resale
Land, building, equipment

Question 6

FICA

Answer 6

Federal insurance contributions act
- A federal act requires most employers and employees to pay taxes to support the federal Social Security program

Question 7

Expenses

Answer 7

A decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenue

Question 8

Employee

Answer 8

One who’s under the control and direction of an employer, with regard to the performance of employment

Question 9

Drawing account/owner withdrawals

Answer 9

Hey, separate owners equity account, in which withdrawals of cash or other assets by the owner for personal use are recorded

Question 10

Double entry bookkeeping/double entry accounting

Answer 10

The process of recording, equal debits and credits for a single business transaction

Question 11

Depreciation expense

Answer 11

That portion of the original cost of a fixed asset that is assigned as an expense to the reporting. Expected to benefit from its use.

Question 12

Depreciation

Answer 12

The loss of 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 fixed asset will help produce during it’s useful life

Question 13

Deposits in transit

Answer 13

Deposits, they have been made an edit to depositors checkbook, but not yet been listed on the bank statement

Question 14

Debit balance

Answer 14

A condition that occurs when the total of the debits in the account is larger than the total of the credits in that account

Question 15

Debit

Answer 15

The left side of a standard account
Abbreviation: DR

Question 16

Current liabilities

Answer 16

Death of a business that are generally paid within one year

Question 17

Current assets

Answer 17

Cash of other assets that will be converted into cash or consumed within one year

Question 18

Current ratio

Answer 18

Current assets, divided by current liabilities

Question 19

Creditor

Answer 19

A business or individual to whom it is owed

Question 20

Credit memorandum

Answer 20

A source document that grants credit to a buyer for purchase return or purchase allowance; items the bank add to the account balance

Question 21

Credit balance

Answer 21

A condition that occurs when the total of the credits in account is larger than the total of the debit in that account

Question 22

Credit

Answer 22

The right side of a standard account
Abbreviation: CR

Question 23

Closing entries

Answer 23

Entries made at the end of each reporting period to transfer the balance of the temporary owners equity’s accounts to the permanent owners equity account into reduce the balance in the temporary owners equity accounts to zero in preparation for the next accounting period

Question 24

Chart of accounts

Answer 24

A list of all the account titles in the account numbers assigned to them

Question 25

Cash basis, accounting

Answer 25

In accounting practice, in which revenue is not recognized in the accounting records until received, and in which expenses are not recognized until paid

Question 26

Cash

Answer 26

Coins, currency, paper, money, checks, credit card, receipts, and money orders received from others, as well as money deposited in the bank

Question 27

Capital/net worth/owners equity/proprietorship

Answer 27

The amount by which the total assets exceed the total liabilities of a business; and owners financial interest in a business

Question 28

Cancelled check

Answer 28

A check which has been paid by the bank and returned to the drawer for recordkeeping

Question 29

Business papers/source documents

Answer 29

The first record of a business transaction, such as check, stubs, receipts, sales, invoices, purchase invoices, cash register tapes, etc.

Question 30

Book value/undepreciated cost

Answer 30

The cost of a fixed asset less it’s accumulated depreciation

Question 31

Bookkeeping

Answer 31

The recording of financial information in a prescribed manner

Question 32

Bookkeeper/information processor

Answer 32

One who is involved in the process of recording financial information in a prescribed manner

Question 33

Bank statement reconciliation

Answer 33

The process by which the depositor attempt to reconcile the bank statement, balance with the checkbook balance

Question 34

Bank statement

Answer 34

An itemized listing, prepared by the bank of additions to the subtractions from a depositors account

Question 35

Balance sheet/statement of financial position/statement of financial condition

Answer 35

A formal financial statement, illustrating the assets, liabilities, and owners equity of a business as of a specific date

Question 36

Bad debts expense, uncollectible accounts expense/loss from uncollectible accounts

Answer 36

Accounts receivable that are uncollectible

Question 37

Assets

Answer 37

Property of monetary value owned by business

Question 38

Allowance for bad debts/allowance for doubtful accounts

Answer 38

A contra asset account utilized to accumulate totals against accounts receivable

Question 39

Age of inventory

Answer 39

Measures the average time required to sell inventory
Calculation: 365 days/inventory turnover

Question 40

Age of accounts receivable

Answer 40

Measures the average time required to collect receivables
Calculation: 365 days/accounts receivable turnover

Question 41

Adjusted trial balance

Answer 41

A trial balance taken after adjusting entries has been recorded

Question 42

Accrual accounting

Answer 42

Recording in each fiscal period Applicable expenses, whether paid or not, and income earned, whether collected or not.

Question 43

Accounts receivable turnover

Answer 43

Measures how many times per year receivables are collected
-Calculation: net credit sales/average accounts receivable

Question 44

Accounts receivable

Answer 44

An unwritten promise by a customer to pay, at a later time, for goods sold, or services rendered

Question 45

Accounting equation

Answer 45

Assets= liabilities + owners equity

Question 46

Accounting cycle

Answer 46

The process involved in journaling, posting to the ledger, taking a trial, balance, preparing accounts, making adjusting and closing entries, and preparing a post closing trial balance

Question 47

Accounting

Answer 47

A language of business employee to communicate financial information, based upon analyzing, recording, classification, summarization, recording, and interpretation of financial data

Question 48

Accountant

Answer 48

One who is concerned with the design of the system of records, the preparation of records, based upon the recording data, and the interpretation of the records

Question 49

Account

Answer 49

A device for recording the changes (increases or decreases) in the fundamental accounting elements

Question 50

Account Balance

Answer 50

The difference between the total debits and the total credits in an account

Question 51

Accounts Payable

Answer 51

An unwritten promise to pay creditors for property, such as merchandise, supplies, or equipment, purchased on credit, or for services received on credit

Question 52

Net Sales

Answer 52

Sales - sales returns and allowances - sales discounts