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SBE > Accounting > Flashcards

Accounting Flashcards

1
Q

Account

A

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

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2
Q

Accountant

A

one who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports

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3
Q

Account balance

A

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

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4
Q

accounting

A

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

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5
Q

accounting cycle

A

the process involved in journalizing, posting to the ledger, taking a trial balance, preparing statements, making adjusting and closing entries, and preparing a post - closing trial balance.

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6
Q

accounting equation

A

assets equal Liabilities plus Owner’s Equity

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7
Q

accounts payable

A

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

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8
Q

accounts receivable

A

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

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9
Q

accounts receivable turnover

A

measures how many times per year receivables are collected.

Calculation: net credit sales divided by average accounts receivable.

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10
Q

average accounts receivable

A

(beginning accounts receivable + ending accounts receivable) divided by 2

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11
Q

accrual accounting

A

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

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12
Q

accrued expense

A

an expense incurred in operating a business during an accounting period, but not yet paid

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13
Q

accrued income

A

income actually earned during an accounting period but which will not be received until a future period

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14
Q

acid

A

test ratio (quick ratio) - quick assets divided by current liabilities

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15
Q

activity analysis

A

measures how efficiently a firm is utilizing its assets

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16
Q

adjusted trial balance

A

a trial balance taken after adjusting entries have been recorded

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17
Q

adjusting entries

A

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

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18
Q

age of accounts receivable

A

measures the average time required to collect receivables.

Calculation: 365 days divided by Accounts Receivable Turnover

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19
Q

age of inventory

A

measures the average time required to sell inventory.

Calculation: 365 days divided by Inventory Turnover

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20
Q

allowance for bad debts (allowance for doubtful accounts)

A

a contra - asset account utilized to accumulate totals against accounts receivable

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21
Q

assets

A

property of monetary value owned by a business

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22
Q

bad debts expense (uncollectible accounts expense; loss from uncollectible accounts)

A

accounts receivable that are uncollectible

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23
Q

balance sheet (statement of financial position; statement of financial condition)

A

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

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24
Q

balance sheet common

A

size statements/percentage method - express the major items in the balance sheet as a percent of the total assets and compare with previous fiscal periods.

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25
Q

balance sheet comparative forms

A

record the balance sheet data for two or more comparable periods on the same form so that the information can be readily compared

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26
Q

banker’s method/360 day method

A

a method of computing interest based on the assumption that there are 360 days in a year

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27
Q

bank statement

A

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

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28
Q

bank statement reconciliation

A

the process by which the depositor attempts to reconcile the bank statement balance with the checkbook balance

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29
Q

bookkeeper (information processor)

A

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

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30
Q

bookkeeping

A

the recording of financial information in a prescribed manner.

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31
Q

book value (undepreciated cost)

A

the cost of a fixed asset less its accumulated depreciation

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32
Q

business papers (source documents)

A

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

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33
Q

calendar year

A

a twelve-month period beginning January 1st and concluding on December 31st

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34
Q

cancelled check

A

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

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35
Q

capital (net worth; owner’s equity; proprietorship)

A

the amount by which the total assets exceed the total liabilities of a business; an owner’s financial interest in a business

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36
Q

cash

A

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

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37
Q

cash basis accounting

A

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

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38
Q

cash discounts

A

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

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39
Q

cash disbursements (cash payments)

A

money and money substitutes paid

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40
Q

cash short and over

A

a special ledger account that is used to keep track of unexplained shortages or overages of cash

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41
Q

Certified Public Accountant (CPA)

A

an individual possessing a college education, having practical experience in accounting and who has passed a comprehensive state examination in order to be certified to practice public accounting in that state

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42
Q

chart of accounts

A

a list of all the account titles and the account numbers assigned to them

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43
Q

checks

A

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

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44
Q

check stub

A

a form on which information is recorded by the drawer of a check concerning the check drawn; a source document

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45
Q

chronological

A

in accounting, to record in order of time

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46
Q

classifying

A

the sorting of the many business transactions in an orderly and systematic manner

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47
Q

closing entries

A

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

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48
Q

compound journal entry

A

an accounting entry that involves more than two accounts

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49
Q

contra account

A

an account designed to accumulate totals to offset a related account

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50
Q

Cr.

A

the abbreviation for credit

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51
Q

credit

A

the right side of a standard account

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52
Q

credit balance

A

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

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53
Q

credit memorandum

A

a source document that grants credit to a buyer for purchase allowance; items in the bank adds to the account balance

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54
Q

creditor

A

a business or individual to whom a debt is owed

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55
Q

current ratio

A

current assets divided by current liabilities

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56
Q

current assets

A

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

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57
Q

current liabilities

A

debts of a business that are generally paid within one year

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58
Q

data entry (recording)

A

the committing of a business transaction and the events surrounding such into writing

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59
Q

debit

A

the left side of a standard account

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60
Q

debit balance

A

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

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61
Q

debit memorandum

A

items the bank deducts from the account balance

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62
Q

debtor

A

the business or individual who owes a debt

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63
Q

deposits in transit

A

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

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64
Q

deposit slip (deposit ticket)

A

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

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65
Q

depreciation

A

the loss in 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 the fixed asset will help produce during its useful life

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66
Q

depreciation expense

A

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

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67
Q

disbursement

A

a payment

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68
Q

discount period

A

a specific number of days during which a discount is available if the account is paid

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69
Q

dishonored check

A

a check not paid by the bank when properly presented

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70
Q

double entry accounting (double entry bookkeeping)

A

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

71
Q

Dr.

A

the abbreviation for debit

72
Q

drawing account (owner withdrawals)

A

a separate owner’s equity account in which withdrawals of cash or other assets by the owner for personal use are recorded

73
Q

employee

A

one who is under the control and direction of an employer with regard to the performance of employment

74
Q

E.O.M.

A

end of month

75
Q

expenses

A

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

76
Q

face of note

A

the principal sum the maker of a note promises to pay

77
Q

federal income tax withholding

A

the amount that an employer must withhold from an employee’s pay for income tax purposes

78
Q

Federal Insurance Contributions Act (F.I.C.A.)

A

a federal act that requires most employers and employees to pay taxes to support the federal social security program

79
Q

Federal Unemployment Tax Act (F.U.T.A.)

A

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

80
Q

F.I.C.A.

A

abbreviation for Federal Insurance Contributions Act

81
Q

fiscal period

A

a period of time covered by an income statement

82
Q

fixed assets (long-term assets)

A

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

83
Q

fixed liabilities (long-term liabilities)

A

liabilities that are not due and payable within one year

84
Q

F.U.T.A.

A

Federal Unemployment Tax Act

85
Q

general journal

A

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

86
Q

general ledger

A

the book of accounts

87
Q

gross earnings (gross pay)

A

income before any deductions have been made

88
Q

gross margins (gross profit)

A

net sales minus the cost of goods sold

89
Q

gross profit percentage

A

gross profit divided by net sales

90
Q

in balance

A

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

91
Q

income (revenue)

A

an inflow of assets as a result of selling a product or providing a service

92
Q

income statement (profit and loss statement; statement of operations; operating statement)

A

a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period.

93
Q

income statement common

A

size statements/percentage method - express the major items in the Income Statement as a percent of Net Sales and compare with previous fiscal periods

94
Q

income statement comparative forms

A

record the income statement date for two or more comparable periods of the same form so that the information can be readily compared

95
Q

income tax

A

a tax levied on the earnings of individuals and businesses by federal, state, and local governments.

96
Q

independent contractor

A

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

97
Q

intangible assets

A

those assets that cannot be touched or grasped (examples include patents, copyrights and goodwill)

98
Q

interest

A

money paid for the use of money

99
Q

interpreting

A

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

100
Q

inventory (merchandise)

A

goods purchased for resale at a profit

101
Q

inventory turnover

A

the number of times the average in inventory has been sold or used up (turned over) during a period
calculation: cost of goods sold for period divided by average inventory

102
Q

average inventory

A

(beginning inventory divided by ending inventory) divided by 2

103
Q

invoice

A

a source document showing quantity, description, prices of items, total amount of purchase and the terms of payment

104
Q

journal

A

any book of original entry

105
Q

journalizing

A

the process of recording business transactions in a book of original entry

106
Q

ledger

A

a book of accounts in which date from transactions recorded in journals are posted and thereby summarized

107
Q

liabilities

A

any debts that a business owes

108
Q

liquidity analysis

A

measures the ability of the firm to meet its current obligations

109
Q

maturity date

A

the date on which payment is due on a promissory note

110
Q

mortgage payable

A

a long-term liability; a written promise that pledges real property as security for payment of a debt

111
Q

net earnings (net pay; take home pay)

A

gross pay less payroll deductions; an employee’s take home pay

112
Q

net income (net profit)

A

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

113
Q

net loss

A

the difference between gross profit and expenses when expenses are larger

114
Q

net purchases

A

purchases minus purchases returns and allowances minus purchase discounts

115
Q

net sales

A

sales minus sales returns and allowances minus sales discounts

116
Q

notes payable

A

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

117
Q

notes receivable

A

a written promise of a customer to pay the business a sum of money at a future date

118
Q

N.S.F.

A

Not Sufficient Funds

119
Q

operating expenses (overhead)

A

expenses incurred in the normal operation of a business

120
Q

original cost basis

A

the amount originally paid for a depreciable asset

121
Q

other expenses

A

expenses incurred that are not the direct result of regular trading activities of a business

122
Q

other income

A

income received that is not the direct result of regular trading activities of a business

123
Q

outstanding checks

A

checks that have been drawn and subtracted from the depositor’s checkbook, but which have not yet been presented to the bank for payment

124
Q

overdraft

A

the issuance of a check without sufficient funds in the account when it is presented for payment

125
Q

permanent accounts

A

accounts that accumulate information across accounting periods; all accounts reported on the balance sheet

126
Q

petty cash fund

A

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

127
Q

petty cash voucher

A

a form used to reflect payments from the petty cash fund

128
Q

post

A

closing trial balance - a work paper prepared after all temporary owner’s equity accounts have been closed and all permanent accounts have been balanced and ruled, proving the equality of the debits and credits.

129
Q

postdated check

A

a check dated subsequent to (following) its date of issuance

130
Q

posting

A

the transferal of data from the journal to the ledger

131
Q

prepaid expenses

A

items which are considered to be assets when acquired, but which will become expenses when consumed or expired

132
Q

principal

A

the face value of a promissory note upon which interest is computed

133
Q

profitability analysis

A

provides evidence concerning the earnings potential of a company and how effectively the firm is being managed

134
Q

profit and loss statement

A

same as income statement

135
Q

profit margin

A

net income divided by net sales

136
Q

promissory note

A

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

137
Q

proprietorship

A

same as captial

138
Q

proving cash

A

the process of determining whether the amount of cash, both on hand and in the bank, is the same as what is indicated in the accounting records

139
Q

purchase invoice

A

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

140
Q

purchase order

A

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

141
Q

purchase requisition

A

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

142
Q

purchases

A

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

143
Q

purchases discounts

A

a temporary owner’s equity contra purchases account used to record discounts taken on inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices

144
Q

purchases returns and allowances

A

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 and/or inferior product quality

145
Q

quarterly

A

a three - month period

146
Q

quick assets

A

cash, marketable securities, accounts and notes receivable

147
Q

rate

A

the annual percentage rate used to compute interest

148
Q

retail sales tax

A

a tax imposed on tangible personal property sold at retail

149
Q

salary

A

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

150
Q

sales

A

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

151
Q

sales discounts

A

a temporary owner’s equity contra sales account used to record discounts given to customers as an incentive for prompt payment

152
Q

sales invoice

A

a source document prepared by the seller that lists the items shipped, their cost and the method of shipment (from the seller’s viewpoint)

153
Q

sales returns and allowances

A

a temporary owner’s equity contra sales account used to record credit given to a customer for shortages or damaged goods

154
Q

salvage value

A

the estimated value of a fixed asset at the end of its useful life

155
Q

statement of account

A

a report sent to each customer, usually at the end of the month, which indicates the status of his or her accounts

156
Q

statement of net worth (statement of owner’s equity)

A

a formal financial statement which summarizes all of the changes in owner’s equity during a specified period of time

157
Q

stop payment order

A

an order by a depositor requesting a bank not to pay on a check previously issued

158
Q

straight

A

line depreciation - a method in which the depreciable cost basis (original cost basis less salvage value) of an asset is apportioned equally over its estimated useful life expressed in terms of month or years

159
Q

summarizing

A

bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements

160
Q

supplies

A

a type of asset that will be consumed as it is used (examples: embalming supplies and office supplies)

161
Q

S.U.T.A.

A

State Unemployment Tax Act

162
Q

T account

A

a skeleton form of an account used for instructional purposes

163
Q

tangible assets

A

those assets that can be appraised by value or seen or touched (ex. pews, chairs, etc)

164
Q

temporary owner’s equity accounts

A

accounts utilized to accumulated income, expenses, and owner’s withdrawals for one accounting period only

165
Q

term of note (time)

A

the period of time from the date of the note to the maturity date

166
Q

transaction

A

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

167
Q

transaction analysis

A

the effect of business activities on the accounting elements

168
Q

transposition error

A

an amount written with the digits in the incorrect order

169
Q

trial balance

A

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

170
Q

U.C.F.

A

Uncollectible Funds

171
Q

useful life

A

the estimated determinable life of a fixed asset

172
Q

W-2 Form

A

Wage and Tax Statement; a report furnished by the employer for each employee indicating gross earnings and deductions

173
Q

W-4 Form

A

Employee’s Withholding Allowance Certificate

174
Q

Wage

A

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

SBE (14 decks)

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