glossary review

  1. Account
    a device for recording the changes (increases or decreases) in the fundamental accounting elements
  2. Account balance
    the difference between the total debits & the total credits in an account
  3. Accounting
    a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting & interpretation of financial data
  4. Accounting cycle
    the process involved in journalizing, positing to the ledger, taking a trial balance, preparing statements, making adjustments & closing entries & preparing a post-closing trial balance
  5. Accounting equation
    • Assets equal Liabilities plus Owner's Equity
    • assets= liabilities + owner's equity
  6. Accounts payable
    an unwritten promise to pay creditors for property, such as merchandise, supplies or equipment, purchased on credit, or for services received on credit
  7. Accounts receivable
    an unwritten promise by a customer to pay, at a later date, for goods sold or services rendered
  8. Accrual accounting
    recording in each fiscal period applicable expenses, whether paid or not, and income earned, whether collected or not
  9. Acid test ratio (quick ratio)
    • quick assets divided by current liabilities
    • qucick assets / current liabilities
  10. adjusting entries
    entries made at the conclusion of a fiscal period to bring accounts up to date
  11. allowance
    an adjustment made for merchandise received damaged or unsatisfactory
  12. analyzing
    determing the fundamental significance of business transactions so that financial information may be properly processed
  13. Assets
    property of monetary value owned by a business
  14. bad debts
    accounts receivables that are uncollectible
  15. balance sheet(statement of financial position, statement of financial condition)
    a formal financial statement illustrating the assets, liabilities, & owner's equity of a business as of specific date
  16. bank statement
    an itemized listing prepared by the bank of additions to the subtractions from a depositor's account
  17. blank endorsement
    the handwritten signature of the payee on the back of the check
  18. book value (undepreciated cost)
    the cost of a fixed asset less its accumulated depreciation
  19. calendar year
    a twelve month period beginning January 1st & concluding on December 31st.
  20. canceled check
    a check which has been paid by the bank & returned to the drawer for recordkeeping
  21. cash discount
    discounts from quoted prices as an inducement for prompt payment of invoices
  22. cash payments journal
    a book of original entry in which only cash disbursements are recorded
  23. cash receipts journal
    a book of original entry in which only cash received are recorded
  24. chart of accounts
    a list of all of the account titles & their numbers assigned to them
  25. check
    a piece of commercial paper drawn on funds in a bank account & payable on demand
  26. closing entries
    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
  27. compound journal entry
    an accounting entry that involoves more than two accounts
  28. contra account
    an account designed to accumulate totals to offset a related account
  29. credit
    the right side of a standard account
  30. Cr.
    the abreviation for credit
  31. credit memorandum (credit memo)
    a document issued by the supplier confirming the amount of the credit allowed
  32. current assets
    cash or other assets that will be convereted into cash or consumed within one year
  33. current ratio
    • current assets divided by current liabilities
    • assets / current liabilities
  34. debit
    the left side of a standard account
  35. debit balance
    a condition which occurs when the total of the debits in an account is larger than the total of the credits in that account
  36. debit memorandum (memo)
    a formal request for credit to be granted by the supplier issued by the buyer for the purchase price of the merchandise returned
  37. declining balance depreciation method (double declining)
    a method of figuring depreciation using a fixed rate applied to the undepreciated cost, resulting in smaller charges as the cost diminishes
  38. depositis in transit
    deposits that have been made & added to depositor's checkbook, but have not yet been listed on the bank statement
  39. deposit ticket (deposit slip)
    a bank form which lists those cash items (currency & coin) & individual checks to be deposited
  40. depreciation
    the loss in value of a fixed asset due to wear & tear & 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
  41. disbursement
    a payment
  42. double entry accounting (double entry bookkeeping)
    the process of recording equal debits & credits for a single business transaction
  43. Dr.
    the abbreviation for debit
  44. drawee
    a person or concern, usually a bank, that has been ordered to make a payment on a check
  45. drawer
    a person (depositor) who signs a check, ordering a payment to be made
  46. employee earnings record
    a seperate record for each employee indicating gross earnings, deductions, & net pay
  47. expense
    a decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenues
  48. face of note
    the principal sum the maker of a note promises to pay
  49. federal unemployment tax act
    a federal act imposed upon each employer for the purpose of financing the administration costs of the federal & state unemployment compensation programs
  50. fiscal period
    a period of time covered by an income statement
  51. fixed assets
    property of a relatively permanent nature used in the operation of a business & not intended for resale
  52. fiscal year
    any consecutive 12 month period
  53. footing
    a total, written in small pencil figures, under the last entry in a column of an account
  54. gross margin
    the difference between net sales & the cost of goods sold
  55. in balance
    a condition in which the total of the debits & the total of the credits are equal in an account
  56. independent contractor
    any person who agrees to perform a service for a fee & who is not subject to the control of those for whom the service is performed
  57. interest
    money paid for the use of money
  58. interpreting
    explaining the significant events or developments that occur, usually taking the form of analysis & comparisons
  59. Journal
    a book of original entry
  60. ledger
    the book of accounts of a business
  61. liabilities
    any debts that a business owes
  62. maker
    an individual who promises to pay on a promissory note; an individual who signs a promissory note
  63. maturity date
    the date on which payment is due on a promissory note
  64. net income (net profit)
    the difference between gross profit & expenses when gross profit is larger
  65. net loss
    the difference between gross profit & expenses when expenses are larger
  66. net purchases
    • purchases minus purchases returns & allowances minus purchase discounts
    • purchases - purchases return
    • allowances - purchase discounts
  67. net sales
    • sales minus sales returns & allowance minus purchase discounts
    • sale - sale return= purchase discount
  68. net working capital
    the excess of current assets over current liabilities
  69. notes payable
    a written promise to pay a creditor a certain amount in the future
  70. payee
    a person or company who will receive payment on a promissory note, check, draft or money order
  71. payroll register
    a multi-column form used to assemble, compute, & summarize the data required at the end of each payroll period
  72. petty cash fund
    a fund of currency & coin established for the payment of small amounts of money
  73. posting
    the transferal of data from the journal to the ledger
  74. purchase invoice
    a source document prepared by the seller listing the items shipped, their cost & the method of shipment (from the buyer's viewpoint)
  75. purchase order
    a written order by buyer for merchandise or other property specified in the purchase requisition
  76. purchase requisition
    a form used to request the reponsibile person or department to purchase merchandise or other property
  77. purchase
    a temporary owner's equity account used to record the buying of merchandise for resale
  78. purchase journal
    a book of original entry used to record purchases of merchandise on account
  79. purchases returns & allowances
    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 & or inferior product quality
  80. quick assets
    cash, marketable securities, accounts & notes receivable
  81. restrictive endorsement
    an endorsement which limits the use of funds to the purpose states (example: 'for deposits only")
  82. salary
    generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year
  83. sales
    a temporary owner's equity account used to record the earning of revenue
  84. sales journal
    a book of original entry used for the recording of sales of merchandise on credit only
  85. scrap value
    the estimated value of a fixed asset at the end of it's useful life
  86. straight line depreciation
    a method in which the depreciable cost basis (original cost basis less salvage value) of an asset is apportioned equally over it's estimated useful life expressed in terms of month or years
  87. t account
    a skeleton form of an account
  88. trade discount
    special discounts on list prices granted to customers in a specific profession to encourage their patronage
  89. transaction
    any activity of a business enterprise that involves the exchange of values
  90. trial balances
    a work paper proving the equality of the debit & credit balances in the ledger
  91. useful life
    the estimated determinable life of a fixed asset
  92. W-4 form
    employees Withholding Allowance Certificate
  93. Wages
    a form of compensation usually for skilled & unskilled labor, expressed in terms of hours, weeks or pieces completed
Card Set
glossary review
Accounting Final review (glossary)