Accounting Terms Flashcards
The span of time covered by a set of financial statements.
Accounting Period
A document used by a company’s accounts payable department to document an invoice received from the supplier and set up the accounts payable.
Accounts Payable Voucher
The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.
Accounts Payables (A/P)
The amount of money owed by customers or clients to business after goods or services have been delivered and/or used.
Accounts Receivables
The recognition of an expense or revenue that has occurred but has not yet been recorded.
Accrual
The expenses an organization incurs that are not directly tied to a specific function such as manufacturing, production or sales.
Administrative Expense
An economic resource that is expected to be of benefit in the future.
Asset
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).
Audit
A financial report that summarizes a company’s financial position, assets, liabilities, and the owner or shareholder equity, at a given time.
Balance Sheet
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.
Bank Reconciliation
The process of recording financial transactions and keeping financial records.
Bookkeeping
Net of cash receipts and cash disbursements relating to a particular activity during a specified accounting period.
Cash Flow
An index of all the financial accounts in the general ledger of a company.
Chart of Accounts
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.
Check Voucher
Procedures used for rationally classifying, recording, and allocation current or predicted costs that relate to a certain product or production process.
Cost Accounting
Figure representing the cost of buying raw materials and producing finished goods.
Cost of Goods Sold
An accounting entry that may either decrease assets or increase liabilities and equity on the company’s balance sheet, depending on the transaction.
Credit (CR)
Ac accounting entry where there is either an increase in assets or a decrease in liabilities on a company’s balance sheet.
Debit (DR)
Expense allowance made for wear and tear on an asset over its estimated useful life.
Depreciation
Payment by cash or check.
Disbursement
A measure of a company’s overall financial performance. (Earnings before interest, taxes, depreciation, and amortization)
EBITDA
Meaning of EBITDA
Earnings before interest, taxes, depreciation, and amortization
Residual Interest in the Assets of an entity that remains after deducting its liabilities.
Equity
refers to a common set of accounting principles. standards, and procedures issued by the Financial Accounting Standards Board (FASB).
GAAP or Generally Accepted Accounting Principles
Collection of all asset, liability, owners’ equity, revenue, and expense accounts.
General Ledger
The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.
Gross Profit
Summary of the effects of Revenues and expenses over a period of time.
Income Statement
A type of tax that governments impose on income generated by businesses and individuals within their jurisdiction.
Income Tax
The term for the goods available for sale and raw materials used to produce goods available for sale.
Inventory
A notation in General Ledger to update balances. It records a single transaction
Journal Entry / Accounting Entry
The sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer.
Labor Cost
Debts or Obligations owed by one entity (Debtor) to another entity (Creditor) payable in money, goods, or services.
Liability
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.
Net Income
An expense a business incurs through its normal business operations. (OPEX)
Operating Expenses
The income generated from normal business operations and includes discounts and deductions for returned merchandise.
Revenue
A time-stamped commercial document that itemizes and records a transaction between a buyer and a seller.
Sales Invoice
An original record that contains the detail that supports or substantiates a transaction that will be (or has been) entered into an accounting system.
Source Document
Money received by an individual or company for a service or product that has yet to be provided or delivered. (prepayment)
Unearned Revenue
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.
Value-Added Tax (VAT)
The amount of an employee’s pay withheld by the employer and sent directly to the government as partial payment of income tax.
Withholding Tax Compensation
The amount due to supplier withheld by the buyer and sent directly to the government as partial payment of income tax.
Withholding Tax Expanded
An asset that will be converted to cash within one year. Typically cash, inventory, or accounts receivables.
Current Assets (CA)
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.
Fixed Assets (FA)
(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.
Trade Payables or A/P Trade
Constitute the money a company owes for non-inventory-related goods such as payroll, reimbursements, etc.
A/P NonTrade
The evaluation of a company’s internal controls, includint its corporate governance and accounting processes.
Internal Audit
Meaning of FASB
Financial Accounting Standards Board
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.
Perpetual inventory
A method of inventory valuation for financial reporting purposes in which a physical count of the inventory is performed at specific intervals.
Periodic Inventory System
