Vocab

Question 1

The allocation of the cost of an asset over its useful life

Answer 1

Depreciation

Question 2

An individual who owns part of a corporation

Answer 2

Shareholder

Question 3

The significance of financial information in decision-making

Answer 3

Materiality

Question 4

An account that reduces the balance of a related account

Answer 4

Contra Account

Question 5

A journal used to record transactions that do not fit in special journals

Answer 5

General Journal

Question 6

A system that records transactions electronically

Answer 6

Computerized Accounting System

Question 7

A legal entity separate from its owners

Answer 7

Corporation

Question 8

Taxes based on wages paid to employees

Answer 8

Payroll Taxes

Question 9

A hybrid business structure with legal protections

Answer 9

Limited Liability Company (LLC)

Question 10

Take-home pay after deductions

Answer 10

Net Pay

Question 11

A financial report showing revenue and expenses over a fiscal period

Answer 11

Income Statement

Question 12

A visual representation of an account used in double-entry bookkeeping

Answer 12

T-Account

Question 13

Social Security and Medicare Tax

Answer 13

FICA

Question 14

Cost incurred in operating a business

Answer 14

Expense

Question 15

Recording revenues and expenses when they are incurred, not when cash is exchanged

Answer 15

Accrual Accounting

Question 16

Shows changes in equity over a period

Answer 16

Statement of Owner’s Equity

Question 17

A document used to organize financial data before preparing statements

Answer 17

Work Sheet

Question 18

Income earned from selling goods or services

Answer 18

Revenue

Question 19

A report from the bank showing account activity

Answer 19

Bank Statement

Question 20

A financial obligation owed by a business

Answer 20

Liability

Question 21

A record of financial transactions in chronological order

Answer 21

Journal

Question 22

An entry that increases liabilities or revenue and decreases assets or expenses

Answer 22

Credit

Question 23

Allocating an equal amount of depreciation each year

Answer 23

Straight-Line Depreciation

Question 24

A check that cannot be processed due to insufficient funds

Answer 24

NSF Check

Question 25

The estimated value of an asset at the end of its useful life

Answer 25

Salvage Value

Question 26

A list of all accounts with their debit and credit balances

Answer 26

Trial Balance

Question 27

Deposits recorded in books but not yet processed by the bank

Answer 27

Deposit in Transit

Question 28

Transferring journal entries to ledger accounts

Answer 28

Posting

Question 29

Procedures to ensure accurate and ethical financial reporting

Answer 29

Internal Controls

Question 30

A trial Balance after adjusting entries

Answer 30

Unadjusted Trial Balance

Question 31

A business owned by two or more people

Answer 31

Partnership

Question 32

Recording transactions only when cash is received or paid

Answer 32

Cash Basis Accounting

Question 33

Checks issued but not yet cleared by the bank

Answer 33

Outstanding Checks

Question 34

Revenue minus expenses

Answer 34

Net Income

Question 35

A depreciation method that expenses more in earlier years

Answer 35

Declining Balance Method

Question 36

A trial Balance after adjusting entries

Answer 36

Adjusted Trial Balance

Question 37

Anything of value owned by a business

Answer 37

Asset

Question 38

Expenses should be recorded in the same period as the revenues they helped generate

Answer 38

Matching Principle

Question 39

Entries used to close temporary accounts and transfer net income/loss to equity

Answer 39

Closing Entries

Question 40

The owner's claims to the assets of a business

Answer 40

Equity

Question 41

An entry that increases assets or expenses and decreases liabilities or revenue

Answer 41

Debit

Question 42

Assets=Liabilities+Owner's Equity

Answer 42

Accounting Equation

Question 43

Total earnings before deductions

Answer 43

Gross Pay

Question 44

The process of matching a company's cash records with bank statements

Answer 44

Bank Reconciliation

Question 45

A financial statement that reports a company's assets, liabilities, and equity

Answer 45

Balance Sheet

Question 46

A set of accounting standards

Answer 46

Generally Accepted Accounting Principles (GAAP)

Question 47

When total expenses exceed total revenue

Answer 47

Net Loss

Question 48

A complete record of financial transactions

Answer 48

General Ledger

Question 49

An entry made at the beginning of an accounting period to simplify bookkeeping

Answer 49

Reversing Entry

Question 50

Reports a business's cash inflows and outflows

Answer 50

Statement of Cash Flow

Question 51

Entries made at the end of an accounting period to update account balances

Answer 51

Adjusting Entries

Question 52

The total depreciation expense recognized by hand

Answer 52

Manual Accounting System

Question 53

Money deducted from an employee's paycheck from taxes

Answer 53

Withholding

Question 54

A journal designed for recording specific types of transactions

Answer 54

Special Journal

Question 55

A business owned by one person

Answer 55

Sole Proprietorship

Question 56

A situation where a financial decisions involves ethical concerns

Answer 56

Ethical Dilemma