Accounting Terms

Question 1

The span of time covered by a set of financial statements.

Answer 1

Accounting Period

Question 2

A document used by a company’s accounts payable department to document an invoice received from the supplier and set up the accounts payable.

Answer 2

Accounts Payable Voucher

Question 3

The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

Answer 3

Accounts Payables (A/P)

Question 4

The amount of money owed by customers or clients to business after goods or services have been delivered and/or used.

Answer 4

Accounts Receivables

Question 5

The recognition of an expense or revenue that has occurred but has not yet been recorded.

Answer 5

Accrual

Question 6

The expenses an organization incurs that are not directly tied to a specific function such as manufacturing, production or sales.

Answer 6

Administrative Expense

Question 7

An economic resource that is expected to be of benefit in the future.

Answer 7

Asset

Question 8

A professional examination of a company’s financial statement by a professional accountant or group to determine that the statement has been presented fairly and prepared using Generally Accepted Accounting Principles (GAAP).

Answer 8

Audit

Question 9

A financial report that summarizes a company’s financial position, assets, liabilities, and the owner or shareholder equity, at a given time.

Answer 9

Balance Sheet

Question 10

A process by which an accountant determines whether and why there is a difference between the balance shown on the bank statement and the balance of the cash account in the firm’s book balance or record.

Answer 10

Bank Reconciliation

Question 11

The process of recording financial transactions and keeping financial records.

Answer 11

Bookkeeping

Question 12

Net of cash receipts and cash disbursements relating to a particular activity during a specified accounting period.

Answer 12

Cash Flow

Question 13

An index of all the financial accounts in the general ledger of a company.

Answer 13

Chart of Accounts

Question 14

A combination of a check and a voucher, also known as a “remittance advice”, which includes pertinent information about the parties to the transaction and thus creates an auditable paper trail about that check’s payment.

Answer 14

Check Voucher

Question 15

Procedures used for rationally classifying, recording, and allocation current or predicted costs that relate to a certain product or production process.

Answer 15

Cost Accounting

Question 16

Figure representing the cost of buying raw materials and producing finished goods.

Answer 16

Cost of Goods Sold

Question 17

An accounting entry that may either decrease assets or increase liabilities and equity on the company’s balance sheet, depending on the transaction.

Answer 17

Credit (CR)

Question 18

Ac accounting entry where there is either an increase in assets or a decrease in liabilities on a company’s balance sheet.

Answer 18

Debit (DR)

Question 19

Expense allowance made for wear and tear on an asset over its estimated useful life.

Answer 19

Depreciation

Question 20

Payment by cash or check.

Answer 20

Disbursement

Question 21

A measure of a company’s overall financial performance. (Earnings before interest, taxes, depreciation, and amortization)

Answer 21

EBITDA

Question 22

Meaning of EBITDA

Answer 22

Earnings before interest, taxes, depreciation, and amortization

Question 23

Residual Interest in the Assets of an entity that remains after deducting its liabilities.

Answer 23

Equity

Question 24

refers to a common set of accounting principles. standards, and procedures issued by the Financial Accounting Standards Board (FASB).

Answer 24

GAAP or Generally Accepted Accounting Principles

Question 25

Collection of all asset, liability, owners' equity, revenue, and expense accounts.

Answer 25

General Ledger

Question 26

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Answer 26

Gross Profit

Question 27

Summary of the effects of Revenues and expenses over a period of time.

Answer 27

Income Statement

Question 28

A type of tax that governments impose on income generated by businesses and individuals within their jurisdiction.

Answer 28

Income Tax

Question 29

The term for the goods available for sale and raw materials used to produce goods available for sale.

Answer 29

Inventory

Question 30

A notation in General Ledger to update balances. It records a single transaction

Answer 30

Journal Entry / Accounting Entry

Question 31

The sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer.

Answer 31

Labor Cost

Question 32

Debts or Obligations owed by one entity (Debtor) to another entity (Creditor) payable in money, goods, or services.

Answer 32

Liability

Question 33

Also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses.

Answer 33

Net Income

Question 34

An expense a business incurs through its normal business operations. (OPEX)

Answer 34

Operating Expenses

Question 35

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Answer 35

Revenue

Question 36

A time-stamped commercial document that itemizes and records a transaction between a buyer and a seller.

Answer 36

Sales Invoice

Question 37

An original record that contains the detail that supports or substantiates a transaction that will be (or has been) entered into an accounting system.

Answer 37

Source Document

Question 38

Money received by an individual or company for a service or product that has yet to be provided or delivered. (prepayment)

Answer 38

Unearned Revenue

Question 39

Consumption Tax levied on the value added to a product at each stage of its manufacturing cycle as well as at the time of purchase by the ultimate consumer.

Answer 39

Value-Added Tax (VAT)

Question 40

The amount of an employee's pay withheld by the employer and sent directly to the government as partial payment of income tax.

Answer 40

Withholding Tax Compensation

Question 41

The amount due to supplier withheld by the buyer and sent directly to the government as partial payment of income tax.

Answer 41

Withholding Tax Expanded

Question 42

An asset that will be converted to cash within one year. Typically cash, inventory, or accounts receivables.

Answer 42

Current Assets (CA)

Question 43

Assets that are long-term and will likely provide benefits to a company for more than one year, such as real estate, land, or major machinery.

Answer 43

Fixed Assets (FA)

Question 44

(A/P) constitute the money a company owes its vendors for inventory-related goods, such as business supplies or materials that are part of the inventory.

Answer 44

Trade Payables or A/P Trade

Question 45

Constitute the money a company owes for non-inventory-related goods such as payroll, reimbursements, etc.

Answer 45

A/P NonTrade

Question 46

The evaluation of a company's internal controls, includint its corporate governance and accounting processes.

Answer 46

Internal Audit

Question 47

Meaning of FASB

Answer 47

Financial Accounting Standards Board

Question 48

A method of accounting for inventory that records the sale or purchase of inventory immediately through the hse of of computerized point-of-sale systems and enterprise asset management software.

Answer 48

Perpetual inventory

Question 49

A method of inventory valuation for financial reporting purposes in which a physical count of the inventory is performed at specific intervals.

Answer 49

Periodic Inventory System