glossary review

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

the difference between the total debits & the total credits in an account

a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting & interpretation of financial data

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

• Assets equal Liabilities plus Owner's Equity
• assets= liabilities + owner's equity

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

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

recording in each fiscal period applicable expenses, whether paid or not, and income earned, whether collected or not

• quick assets divided by current liabilities
• qucick assets / current liabilities

entries made at the conclusion of a fiscal period to bring accounts up to date

an adjustment made for merchandise received damaged or unsatisfactory

determing the fundamental significance of business transactions so that financial information may be properly processed

property of monetary value owned by a business

accounts receivables that are uncollectible

a formal financial statement illustrating the assets, liabilities, & owner's equity of a business as of specific date

an itemized listing prepared by the bank of additions to the subtractions from a depositor's account

the handwritten signature of the payee on the back of the check

the cost of a fixed asset less its accumulated depreciation

a twelve month period beginning January 1st & concluding on December 31st.

a check which has been paid by the bank & returned to the drawer for recordkeeping

discounts from quoted prices as an inducement for prompt payment of invoices

a book of original entry in which only cash disbursements are recorded

a book of original entry in which only cash received are recorded

a list of all of the account titles & their numbers assigned to them

a piece of commercial paper drawn on funds in a bank account & payable on demand

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

an accounting entry that involoves more than two accounts

an account designed to accumulate totals to offset a related account

the right side of a standard account

the abreviation for credit

a document issued by the supplier confirming the amount of the credit allowed

cash or other assets that will be convereted into cash or consumed within one year

• current assets divided by current liabilities
• assets / current liabilities

the left side of a standard account

a condition which occurs when the total of the debits in an account is larger than the total of the credits in that account

a formal request for credit to be granted by the supplier issued by the buyer for the purchase price of the merchandise returned

a method of figuring depreciation using a fixed rate applied to the undepreciated cost, resulting in smaller charges as the cost diminishes

deposits that have been made & added to depositor's checkbook, but have not yet been listed on the bank statement

a bank form which lists those cash items (currency & coin) & individual checks to be deposited

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

a payment

the process of recording equal debits & credits for a single business transaction

the abbreviation for debit

a person or concern, usually a bank, that has been ordered to make a payment on a check

a person (depositor) who signs a check, ordering a payment to be made

a seperate record for each employee indicating gross earnings, deductions, & net pay

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

the principal sum the maker of a note promises to pay

a federal act imposed upon each employer for the purpose of financing the administration costs of the federal & state unemployment compensation programs

a period of time covered by an income statement

property of a relatively permanent nature used in the operation of a business & not intended for resale

any consecutive 12 month period

a total, written in small pencil figures, under the last entry in a column of an account

the difference between net sales & the cost of goods sold

a condition in which the total of the debits & the total of the credits are equal in an account

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

money paid for the use of money

explaining the significant events or developments that occur, usually taking the form of analysis & comparisons

a book of original entry

the book of accounts of a business

any debts that a business owes

an individual who promises to pay on a promissory note; an individual who signs a promissory note

the date on which payment is due on a promissory note

the difference between gross profit & expenses when gross profit is larger

the difference between gross profit & expenses when expenses are larger

• purchases minus purchases returns & allowances minus purchase discounts
• purchases - purchases return
• allowances - purchase discounts

• sales minus sales returns & allowance minus purchase discounts
• sale - sale return= purchase discount

the excess of current assets over current liabilities

a written promise to pay a creditor a certain amount in the future

a person or company who will receive payment on a promissory note, check, draft or money order

a multi-column form used to assemble, compute, & summarize the data required at the end of each payroll period

a fund of currency & coin established for the payment of small amounts of money

the transferal of data from the journal to the ledger

a source document prepared by the seller listing the items shipped, their cost & the method of shipment (from the buyer's viewpoint)

a written order by buyer for merchandise or other property specified in the purchase requisition

a form used to request the reponsibile person or department to purchase merchandise or other property

a temporary owner's equity account used to record the buying of merchandise for resale

a book of original entry used to record purchases of merchandise on account

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

cash, marketable securities, accounts & notes receivable

an endorsement which limits the use of funds to the purpose states (example: 'for deposits only")

generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year

a temporary owner's equity account used to record the earning of revenue

a book of original entry used for the recording of sales of merchandise on credit only

the estimated value of a fixed asset at the end of it's useful life

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

a skeleton form of an account

special discounts on list prices granted to customers in a specific profession to encourage their patronage

any activity of a business enterprise that involves the exchange of values

a work paper proving the equality of the debit & credit balances in the ledger

the estimated determinable life of a fixed asset

employees Withholding Allowance Certificate

a form of compensation usually for skilled & unskilled labor, expressed in terms of hours, weeks or pieces completed