Accounting Flashcards
Wage
A form of compensation for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed
W-4 Form
Employee’s withholding allowance certificate
W-2 Form
Wage and tax statement; a report furnished by employer for each employee indicating gross earnings and deductions
Useful Life
The estimated determinable life of a fixed asset
I.C.F
Uncollectible funds
Trial Balance
A work paper proving the equality of the debit and credit balances in the ledger
Transposition Error
An amount written with the digits in incorrect order
Transaction Analysis
The effect of business activities in the accounting elements
Transaction
Any activity if a business enterprise that involves the exchange of values
Term of Note/Time
The period of time from the date of the note to the maturity date
Temporary Owner’s Equity Accounts
Accounts utilized to accumulated income, expenses, and owners withdrawals for one accounting period only
Tangible assets
Those assets that can be appraised by value or seen or touched
T-Account
A skeleton form of an account used for instructional purposes
S.U.T.A
State Unemployment Tax Act
Supplies
A type of asset that will be consumed as it is used
Ex. Office supplies
Summarizing
Bring accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements
Straight Line Depreciation
A method in which the depreciable cost basis (original cost basis salvage value) is an asset is apportioned equally over its estimated useful Life expressed in terms of month or years
Stop Payment Order
An order by a depositor requesting a bank not to pay on a check previously issued
Statement of Owner’s Equity/Net Worth
A formal financial statement which summarizes all of the changes in owners equity during a specified period of time
Statement of Account
A report sent to each customer, usually at the end of the month,which indicates the status of his or her account
Salvage Value
The estimated value of a fixed asset at the end of its useful Life
Sales returns and allowances
A temporary owners equity contra sales account used to record credit given to a customer for shortages or damaged goods
Sales Invoice
A source document prepared by the seller that lists the items shipped, their cost and the method of shipment form the sellers viewpoint
Sales discounts
A temporary owner’s equity contra sales account used to record discounts given to customers as an incentive for prompt payment
Sales
A temporary owners owners equity account used to record the earning of revenue
Salary
Are generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year
Retail Sales Tax
A tax imposed on tangible personal property sold at retail
Rate
The annual percentage rate used to compute interest
Quick Assets
Cash, marketable, securities, accounts, and notes receivable
Quarterly
A three month period
Purchases Returns and Allowances
A temporary owner’s equity contra purchases account utilized to record the return of merchandise to manufacture or supplier as the result of material defects in workmanship and/or inferior product quality
Purchases Discounts
A temporary owner’s equity contra purchases account used to record discounts taken in inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices
Purchases
A temporary owner’s equity account used to record the buying of merchandise for resale
Purchase Requisition
A form used to request the responsible person or department to purchase merchandise or other property
Purchase Order
A written order by a buyer for merchandise or other property specified in the purchase requisition
Purchase Invoice
A source document prepared by the seller listing the items shipped, their cost and the method of payment (from the buyer’s viewpoint)
Proving Cash
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
Promissory Note
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
Profit Margin
Net income divided by net sales
profitability analysis
Provides evidence concerning the earning potential of a company and how effectively the firm is being managed
Principal
The face value of a promissory note upon which interest is computed
Prepaid Expenses
Items which are considered to be assets when acquired, but church become expenses when consumed or expired
Posting
The transferral of data from the journal to the ledger
Post dated Check
A check dates subsequent to (following) it’s date of issuance
Post-closing trial Balance
A work paper prepared after all temporary owners equity of the debits and credits
Petty Cash Voucher
A form used to reflect payments from the petty cash fund
Petty cash fund
A fund of currency and coin established for the payment of small amounts of money
Permanent accounts
Accounts, that accumulate information across accounting periods; all accounts reported on the balance sheet
Overdraft
The issuance of a check without sufficient funds in the account when it is presented for payment
Outstanding checks
Checks that have been drawn in subtracted from the depositors checkbook, but which have not yet been presented to the bank for payment
Other income
Income received, that is not the direct result of regular trading activities of a business
Original cost basis
The amount originally paid for depreciable asset
Note payable
A written promise to pay a creditor, a certain amount in the future
Notes receivable
A written promise of a customer to pay the business a sum of money at a future time
NSF
Not sufficient funds
Net purchases
Purchases minus purchase returns and allowances minus purchase discounts
Net loss
The difference between gross profit and expenses, when expenses are higher
Net income/net profit
The difference between gross profit and expenses, when gross profit is larger
Net earnings/net pay/take home pay
Gross pay less payroll deductions; an employees take home pay
Mortgage payable
A long-term liability; a written promise that pledges real property as security for payment of a debt
Maturity date
The dates on which payment is due on a promissory note
Liquidity analysis
And analysis that measures the ability of the firm to meet its current obligations
Liabilities
Any dates that a business owes
Ledger
A book of accounts, in which data from transactions recorded in journals are posted and thereby summarized
Journalizing
The process of recording business transactions in a book of original entry
Journal
Any book of original entry
Invoice
A source document, showing quantity, description, prices of items, total amount of purchase, and the terms of payment
Average inventory
(Beginning inventory plus ending inventory)/2
Inventory turnover
The number of times the average in inventory has been sold or used up/turned over during the period
Calculation: cost of good sold for period/average inventory
Inventory/merchandise
Good purchased for resale at a profit
Interpreting
Explaining the significant events of developments that occur, usually taking the form of analysis and comparisons
Interest
Money paid for the use of money
Intangible assets
Those assets that cannot be touched or grasped
(patents, copyrights, and Goodwill)
Independent contractor
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
Income tax
A tax levied on the earnings of individuals and businesses, by federal, state, and other local governments
Income statement comparative forms
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, common
Size statements/percent period
Express the major terms in the income statement as a percent of net sales, and compare with previous fiscal periods
Income/revenue
An inflow of assets as a result of selling a product or providing a service
Income statement
Profit and loss statement; statement of operations; operating statement
- A formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period
In balance
A condition in which the total of the debit and a total of the credits are equal in an account
Gross profit percentage
Gross profit divided by net sales
Gross margin/gross profit
Net sales minus the cost of goods sold
Gross earnings/gross pay
Income before any deductions have been made
General ledger
The book of accounts
General Journal
A book of original entry in which any business transactions is recorded in chronological order
FUTA
Financial unemployment tax act
- A federal act imposed upon each employer for financing, the administration cost of the federal and state unemployment compensation programs
Fixed liabilities/long-term liabilities
Liabilities that are not due and payable within one year
Fixed assets/long-term assets
Property of a relatively permanent nature, used in the operation of a business and not intended for resale
Land, building, equipment
Fiscal Period.
A period of time covered by an income statement
FICA
Federal insurance contributions act
- A federal act requires most employers and employees to pay taxes to support the federal Social Security program
Federal income tax withholding
The amount that an employer must withhold from an employees pay for income tax purposes
Face of note
The personal some the employer of a note promises to pay
Expenses
A decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenue
EOM
End of the month
Employee
One who’s under the control and direction of an employer, with regard to the performance of employment
Drawing account/owner withdrawals
Hey, separate owners equity account, in which withdrawals of cash or other assets by the owner for personal use are recorded
Double entry bookkeeping/double entry accounting
The process of recording, equal debits and credits for a single business transaction
Dishonored check
Hey, chick not paid by the bank when properly presented
Discount period
Specific number of days during which a discount is available if the account is paid
Disbursement
A payment
Depreciation expense
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.
Depreciation
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
Deposit slip/deposit ticket
A bank form that list those cash items currency in coin and individual checks to be deposited
Deposits in transit
Deposits, they have been made an edit to depositors checkbook, but not yet been listed on the bank statement
Debtor
The business or individual who owes a debt
Debit memorandum
Items the bank deduct from the account balance
Debit balance
A condition that occurs when the total of the debits in the account is larger than the total of the credits in that account
Debit
The left side of a standard account
Abbreviation: DR
Data entry/recording
The committing of a business transaction and the events surrounding such into writing
Current liabilities
Death of a business that are generally paid within one year
Current assets
Cash of other assets that will be converted into cash or consumed within one year
Current ratio
Current assets, divided by current liabilities
Creditor
A business or individual to whom it is owed
Credit memorandum
A source document that grants credit to a buyer for purchase return or purchase allowance; items the bank add to the account balance
Credit balance
A condition that occurs when the total of the credits in account is larger than the total of the debit in that account
Credit
The right side of a standard account
Abbreviation: CR
Contra account
An account designed to accumulate totals to offset a related account
Compound journal entry
In accounting entries that involves more than two accounts
Closing entries
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
Classifying
The sorting of the mini business transactions in an orderly and systematic manner
Chronological
In accounting, to record in order of time
Check stub
A form on which information is recorded by the driver of a check concerning the check drawn; a source document
Checks
A piece of commercial paper drawn on sons in a bank account and Payable on-demand
Chart of accounts
A list of all the account titles in the account numbers assigned to them
Certified public accountant/CPA
An individual possessing a college education, having practical experience in accounting, and who has passed a comprehensive stay examination in order to be certified to practice public accounting in that state
Cash short and over
A special ledger account that is used to keep track of unexplained, shortages or overages of cash
Cash disbursements/cash payments
Money and money substitutes paid
Cash discounts
Discounts from quoted prices, as in inducement for prompt payment of invoices
Cash basis, accounting
In accounting practice, in which revenue is not recognized in the accounting records until received, and in which expenses are not recognized until paid
Cash
Coins, currency, paper, money, checks, credit card, receipts, and money orders received from others, as well as money deposited in the bank
Capital/net worth/owners equity/proprietorship
The amount by which the total assets exceed the total liabilities of a business; and owners financial interest in a business
Cancelled check
A check which has been paid by the bank and returned to the drawer for recordkeeping
Calendar year
A 12 month period beginning January 1 and concluding on December 31
Business papers/source documents
The first record of a business transaction, such as check, stubs, receipts, sales, invoices, purchase invoices, cash register tapes, etc.
Book value/undepreciated cost
The cost of a fixed asset less it’s accumulated depreciation
Bookkeeping
The recording of financial information in a prescribed manner
Bookkeeper/information processor
One who is involved in the process of recording financial information in a prescribed manner
Bank statement reconciliation
The process by which the depositor attempt to reconcile the bank statement, balance with the checkbook balance
Bank statement
An itemized listing, prepared by the bank of additions to the subtractions from a depositors account
Bankers metal/360 day
A method of competing interest based on the assumption that there are 360 days in a year
Balance sheet comparative forms
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 common
Size statements/ period Method.
Xpress the major items in the balance sheet as a percent of the total assets, and compare with the previous fiscal periods
Balance sheet/statement of financial position/statement of financial condition
A formal financial statement, illustrating the assets, liabilities, and owners equity of a business as of a specific date
Bad debts expense, uncollectible accounts expense/loss from uncollectible accounts
Accounts receivable that are uncollectible
Assets
Property of monetary value owned by business
Allowance for bad debts/allowance for doubtful accounts
A contra asset account utilized to accumulate totals against accounts receivable
Age of inventory
Measures the average time required to sell inventory
Calculation: 365 days/inventory turnover
Age of accounts receivable
Measures the average time required to collect receivables
Calculation: 365 days/accounts receivable turnover
Adjusting entries
Injuries made at the conclusion of a fiscal period to bring accounts up-to-date
Adjusted trial balance
A trial balance taken after adjusting entries has been recorded
Activity analysis
Measures how efficiently a firm is utilizing is assets
Acid test ratio/quick ratio
Quick assets/current liabilities
Accrued income
Income actually earn during an accounting. But which will not be received until a future period
Accrued expense
Expenses include in, operating a business during an accounting period, but not yet paid
Accrual accounting
Recording in each fiscal period Applicable expenses, whether paid or not, and income earned, whether collected or not.
Average accounts receivable
(Beginning accounts receivable + ending accounts receivable)/2
Accounts receivable turnover
Measures how many times per year receivables are collected
-Calculation: net credit sales/average accounts receivable
Accounts receivable
An unwritten promise by a customer to pay, at a later time, for goods sold, or services rendered
Accounting equation
Assets= liabilities + owners equity
Accounting cycle
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
Accounting
A language of business employee to communicate financial information, based upon analyzing, recording, classification, summarization, recording, and interpretation of financial data
Accountant
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
Account
A device for recording the changes (increases or decreases) in the fundamental accounting elements
Account Balance
The difference between the total debits and the total credits in an account
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
Net Sales
Sales - sales returns and allowances - sales discounts
