Accounting Glossary Flashcards
1
Q
A device for recording the changes (increases or decreases) in the fundamental accounting elements
A
Account
2
Q
One who is concerned with the design of the system of records, the preparation of reports based upon the recorded date, and the interpretation of the reports.
A
Accountant
3
Q
The difference between the total debits and the total credits in an account
A
Account balance
4
Q
A language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data
A
Accounting
5
Q
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, which is repeated each fiscal period
A
Accounting cycle
6
Q
Assets equal liabilities plus owner’s equity
A
Accounting equation
7
Q
An unwritten promise to pay creditors for property, such as merchandise, supplies or equipment, purchased on credit, or for services received on credit
A
Accounts payable
8
Q
An unwritten promise by a customer to pay, at a later date, for goods sold or services rendered
A
Accounts receivable
9
Q
Recording in each fiscal period applicable expenses, whether paid or not, and income earned, whether collected or not
A
Accrual Accounting
10
Q
An expense incurred in operating a business during an accounting period, but not yet paid
A
Accrued expense
11
Q
Income actually earned during an accounting period but which will not be received until a future period
A
Accrued income
12
Q
A trial balance taken after adjusting entries have been recorded
A
Adjusted trial balance
13
Q
Entries made at the conclusion of a fiscal period to bring accounts up to date
A
Adjusting entries
14
Q
Determining the fundamental significance of business transactions so that financial information may be properly processed
A
Analyzing
15
Q
Property of monetary value owned by a business
A
Assets
16
Q
A formal financial statement illustrating the assets, liabilities, and owner’s equity of a business as of a specific date
A
Balance sheet
Statement of financial position
Statement of financial condition
17
Q
Express the major items in the balance sheet as a percent of the total assets and compare with previous fiscal periods
A
Balance sheet common-size statements
Percentage method
18
Q
A check drawn by one bank on another bank in which it has funds on deposit
A
Bank draft
19
Q
An itemized listing prepared by the bank of additions to the subtractions from a depositor’s account
A
Bank statement
20
Q
The process by which the depositor attempts to reconcile the bank statement balance with the checkbook balance
A
Bank statement reconciliation
21
Q
The handwritten signature of the payee on the back of the check
A
Blank endorsement
22
Q
One who is involved in the process of recording financial information in a prescribed manner
(2 names)
A
Bookkeeper
Information processor
23
Q
The recording of financial information in a prescribed manner
A
Bookkeeping
24
Q
The cost of a fixed asset less its accumulated depreciation
A
Book value
Undepreciated cost
25
A 12 month period beginning January 1st and concluding on December 31st
Calendar year
26
A check which has been paid by the bank and returned to the drawer for recordkeeping
Canceled check
27
The amount by which the total assets exceed the total liabilities of a business
Capital
Net worth
Owner’s equity
Proprietorship
28
An owner’s financial interest in a business
Capital
Net worth
Owner’s equity
Proprietorship
29
Coins, currency (paper money), checks, credit card receipts, and money orders received from others, as well as money deposited in the bank
Cash
30
An accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid
Cash basis accounting
31
Money and money substitutes paid
Cash disbursements
Cash payments
32
A special ledger account which is used to keep track of unexplained shortages or overages of cash
Cash short and over
33
A check drawn by a bank on its own funds and signed by an officer of the bank
Cashiers check
34
A check which carries the guarantee of the bank that sufficient funds are available to pay the check when it is presented
Certified check
35
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
Certified public accountant
CPA
36
A list of all the account titles and the account numbers assigned to them
Chart of accounts
37
A piece of commercial paper drawn on funds in a bank account and payable on demand
Check out
38
A form on which information is recorded by the drawer of a check concerning the check drawn
A source document
Check stub
39
In accounting, to record in order of time
Chronological
40
The sorting of the many business transactions in an orderly and systematic manner
Classifying
41
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
Closing entries
42
A book of original entry which combines into one journal the features of the two column general journal and a special journal
Combination journal
43
An accounting entry that involves more than two accounts
Compound journal entry
44
An account designed to accumulate totals to offset a related account
Contra account
45
The abbreviation for credit
CR.
46
The right side of a standard account
Credit
47
A condition that occurs when the total of the credits in an account is larger than the total of the debits in that account
Credit balance
48
A source document that grants credit to a buyer for purchase return or purchase allowance
Credit memorandum
49
A business or individual to whom a debt is owed
Creditor
50
The process of entering the journal page number in the ledger and the ledger account number in the journal
Cross referencing
51
Cash or other assets that will be converted into cash or consumed within one year
Current assets
52
Debts of a business that are generally paid within one year
Current liabilities
53
The committing of a business transaction and the events surrounding such into writing
(2 names)
Data entry
Recording
54
The left side of a standard account
Debit
55
A condition which occurs when the total of the debits in an account is larger than the total of the credits in that account
Debit balance
56
Items the bank deducts from the account balance
Debit memorandum
57
The business or individual who owes a debt
Debtor
58
Deposits that have been made and added to depositor’s checkbook, but which have not yet been listed on the bank statement
Deposits in transit
59
A bank form which lists those cash items (currency and coin) and individual checks to be deposited
Deposit slip
Deposit ticket
60
The loss in value of a fixed asset due to wear and tear and the passage of time
Depreciation
61
A method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life
Depreciation
62
That 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
Depreciation expense
63
A payment
Disbursement
64
A check not paid by the bank when properly presented
Dishonored check
65
The process of recording equal debits and credits for a single business transaction
Double entry accounting
Double entry bookkeeping
66
The abbreviation for debit
DR.
67
A person or concern, usually a bank, that has been ordered to make a payment on a check or draft
Drawee
68
A person (depositors) who signs a check, ordering a payment to be made
Drawer
69
A separate owner’s equity account in which withdrawals of cash or other assets by the owner for personal use are recorded
Drawing account
Owner withdrawals
70
One who is under the control and direction of an employer with regard to the performance of employment
Employee
71
The signature of the payee or other holder placed on the back of a check or other negotiation instrument
Endorsement
Indorsement
72
A person or company whose name is written on the back of a check
Endorser
73
End of month
EOM
74
A decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenues
Expense
75
The amount that an employer must withhold from an employee’s pay from income tax purposes
Federal income tax withholding
76
A federal act which requires most employers and employees to pay taxes to support the federal social security program
Federal insurance contributions act
77
A federal act which requires most employers and employees to pay taxes to support the federal social security program
(What is the abbreviation?)
FICA
78
A federal act imposed upon each employer for the purpose of financing the administration costs of the federal and state unemployment compensation programs
Federal unemployment tax act
79
A federal act imposed upon each employer for the purpose of financing the administration costs of the federal and state unemployment compensation programs
(What is the abbreviation?)
FUTA
80
The process of communicating the results achieved during an accounting period to others
Final processing
81
The process of communicating the results achieved during an accounting period to others
Reporting
82
A period of time covered by an income statement
Fiscal period
83
Property of a relatively permanent nature used in the operation of a business and not intended for resale
Fixed assets
Long term assets
84
Liabilities that are not due and payable within one year
Fixed liabilities
Long term liabilities
85
A total, written in small pencil figures, under the last entry in a column of an account
(2 names)
Footing
Pencils footing
86
A book of original entry in which business transactions are recorded in chronological order
General journal
87
The book of accounts
General ledger
88
Income before any deductions have been made
(2 names)
Gross earnings
Gross pay
89
Income before any deductions have been made
(2 names)
Gross earnings
Gross pay
90
A condition in which the total of the debits and the total of the credits are equal in an account
In balance
91
An inflow of assets as a results of selling a product or providing a service
(2 names)
Income
Revenue
92
A formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period
(4 names)
Income statement
Operating statement
Profit and loss statement
Statement of operations
93
A tax levied on the earnings of individuals and businesses by federal, state, and local governments
Income tax
94
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
Independent contractor
95
Those assets that cannot be touched or grasped (examples include patents, copyrights, and goodwill)
Intangible assets
96
Money paid for the use of money
Interest
97
Goods purchased for resale at a profit
(2 names)
Inventory
Merchandise
98
A source document showing quantity, description, prices of items, total amount of purchase, and the terms of payment
Invoice
99
Any book of original entry
Journal
100
The process of recording business transactions in a journal
Journalizing
101
A book of accounts in which data from transactions recorded in journals are posted and thereby summarized
Ledger
102
Any debts that a business owes
Liabilities
103
A long term liabilities;
A written promise that pledges real property as security for payment of a debt
Mortgage payable
104
Gross pay - payroll deductions;
An employee’s take home pay
(2 names)
Net earnings
Net pay
105
The difference between gross profit and expenses when gross profit is larger
(2 names)
Net income
Net profit
106
The difference between gross profit and expenses when expenses are larger
Net loss
107
The amount of pay after deductions (income taxes, FICA taxes, etc.) have been subtracted
(2 names)
Net pay
Take home pay
108
A written promise to pay a creditor a certain amount in the future
Notes payable
109
A written promise of a customer to pay the business a sum of money at a future date
Notes receivable
110
Not sufficient funds
NSF
111
The amount originally paid for a depreciable asset
Original cost basis
112
Checks that have been drawn and subtracted from the depositor’s checkbook, but which have not yet been presented to the bank for payment
Outstanding checks
113
The issuance of a check without sufficient funds in the account when it is presented for payment
Overdraft
114
A person or company who will receive payment on a promissory note, check, draft, or money order
Payee
115
Accounts that accumulate information across accounting periods;
All accounts reported on the balance sheet
Permanent accounts
116
A fund of currency and coin established for the payment of small amounts of money
Petty cash fund
117
A form used to reflect payments from the petty cash fund
Petty cash voucher
118
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 debits and credits
Post closing trial balance
119
A check dated subsequent to (following) its date of issuance
Post dated check
120
The transferral of data from the journal to the ledger
Posting
121
Items which are considered to be assets when acquired, but which will become expenses when consumed or expired
Prepaid expenses
122
A source document prepared by the seller listing the items shipped, their cost, and the method of shipment (from the buyer’s viewpoint)
Purchase invoice
123
A three month period
Quarterly
124
The annual percentage rate used to computer interest
Rate
125
An endorsement which limits the use of funds to the purpose stated (example: “For Deposit Only”)
Restrictive endorsement
126
Generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year
Salary
127
A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment (from the seller’s viewpoint)
Sales invoice
128
The estimated value of a fixed asset at the end of its useful life
Salvage value
129
The first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.
(2 names)
Source documents
Business papers
130
A formal financial statement which summarizes all of the changes in owner’s equity during a specified period of time
(2 names)
Statement of owner’s equity
Statement of net worth
131
An order by a depositor requesting a bank not to pay on a check previously issued
Stop payment order
132
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 months or years
Straight line depreciation
133
Bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements
Summarizing
134
A type of asset that will be consumed as its its used
Supplies
135
State unemployment tax act
SUTA
136
A skeleton form of an account used for instructional purposes
T account
137
Those assets that can be appraised by value or seen or touched
Tangible assets
138
Accounts utilized to accumulate income, expenses, and owner’s withdrawals for one accounting period only
Temporary owner’s equity accounts
139
Any activity of a business enterprise that involves the exchange of values
Transaction
140
The effect of business activities on the accounting elements
Transaction analysis
141
An amount written with the digits in incorrect order
Transposition error
142
Uncollectible funds
UCF
143
The estimated determinable life of a fixed asset
Useful life
144
Wage and tax statement
W-2 Form
145
A report furnished by the employer for each employee indicated gross earnings and deductions for income and FICA taxes
W-2 Form
146
Employees’ withholding allowance certificate
W-4 form
147
A form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed
Wage
148
An expanded trial balance utilized for computing, classifying, and sorting account balances before preparing the formal financial statements
Work sheet
149
Measures how many times per year receivables are collected
Accounts receivable turnover
150
Net Credit Sales / Average Accounts Receivable
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Accounts Receivable Turnover
151
Measures how efficiently a firm is utilizing its assets
Activity Analysis
152
Measures the average time required to collect receivables
Age of accounts receivable
153
365 / Accounts receivable turnover
Age of accounts receivable
154
Measures the average time required to sell inventory
Age of inventory
155
365 / inventory turnover
Age of inventory
156
A contra account utilized to accumulate totals against accounts receivable
(2 names)
Allowance for doubtful accounts
Allowance for bad debts
157
Accounts receivable that are uncollectible
(3 name)
Bad debts expense
Uncollectible accounts expense
Loss from uncollectible accounts
158
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 comparative forms
159
A method of computing interest based on the assumption that there are 360 days in a year
(2 names)
Banker’s method
360 day method
160
A formal written statement, which may be based upon adjusted historical data, of management’s plans for the future expressed in financial terms
Budget
161
Discounts from quoted prices as an inducement for prompt payment of invoices
Cash discounts
162
A book of original entry in which only cash disbursement are recorded
Cash payments journal
163
A book of original entry in which only cash receipts are recorded
Cash receipts journal
164
Current assets / current liabilities
Current asset ratio
165
A specific number of days during which a discount is available if the account is paid
Discount period
166
The principal sum a maker of a note promises to pay
Face of note
167
Net sales - cost of goods sold
(2 names)
Gross margin
Gross profit
168
Gross profit / net sales
Gross profit percentage
169
Express major items in the income statement as a percent of the net sales and compare with previous fiscal periods
(2 names)
Income statement common-size statements
Percentage method
170
Record the income statement data for two or more comparable periods on the same form so that the information can be readily compared
Income statement comparative forms
171
Measures the ability of the firm to meet its current obligations
Liquidity analysis
172
Number of times the average inventory has been sold or used up (turned over) during a period
Inventory turnover
173
Cost of goods sold for period / average inventory
Inventory turnover
174
An individual who promises to pay on a promissory note
An individual who signs a promissory note
Maker
175
The date on which payment is due on a promissory note
Maturity date
176
Purchases - purchase returns and allowances - purchase discounts
Net purchases
177
Sales - sales returns and allowances - sales discounts
Net sales
178
Expenses incurred in the normal operation of a business
(2 names)
Operating expenses
Overhead
179
Expenses incurred that are not the direct result of regular trading activities of a business
Other expenses
180
Income received that is not the direct result of regular trading activities of a business
Other income
181
The face value of a promissory note upon which interest is computed
Principal
182
Provides evidence concerning the earnings potential of a company and how effectively the firm is being managed
Profitability analysis
183
Net income / net sales
Profit margin
184
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
Promissory note
185
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
Proving cash
186
A process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page
Proving the journal
187
A written order by a buyer for merchandise or other property specified in the purchase requisition
Purchase order
188
A form used to request the responsible person or department to purchase merchandise or other property
Purchase requisition
189
A temporary owner’s equity account used to record the buying of merchandise for resale
Purchases
190
A temporary owner’s equity contra account used to record discounts taken on inventory purchases;
the amount of any discounts granted by suppliers to encourage prompt payment of their invoices
Purchase discounts
191
A book of original entry used to record purchases of merchandise on credit only
Purchase journal
192
A temporary owner’s equity contra 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
Purchases returns and allowances
193
Cash, marketable securities, accounts and notes receivable
Quick assets
194
Quick assets / current liabilities
(2 names)
Quick ratio
Acid test ratio
195
A tax imposed on tangible personal property sold at retail
Retail sales tax
196
A temporary owner’s equity account used to record the earning of revenue
Sales
197
A temporary owner’s equity contra account used to record discounts given to customers as an inventive for prompt payment
Sales discounts
198
A book of original entry used for the recording of sales of merchandise on credit only
Sales journal
199
A temporary owner’s equity contra account used to record credit given to a customer for shortages or damaged goods
Sales returns and allowances
200
A special journal designed to accumulate data about only one kind of business transaction
Special journal
201
A report sent to each customer, usually at the end of the month, which indicates the status of their account
Statement of account
202
The period of time from the date of the note to the maturity date
(2 names)
Time
Term of note
