Accounting Vocab Flashcards
Account
An individual record for assets, liabilities, equity, revenue, cost of goods and expense.
Account Balance
The difference between total debits and credits in an account.
Accounting Period
A designated time period, month, quarter or a year, for which a company’s net income or net loss is calculated.
Accounts Payable
An account that a business owes money too for services or product received.
Accural Method of Accounting
An accounting method where revenue is recorded when it is earned and expenses are recorded when they are incurred.
Asset
Items of value, including cash, equipment, land, buildings, furniture owned by a business.
Balance Sheet
A financial statement that lists the balances of the assets, liabilities and equity of a business on a specific date.
Calendar Year
January 01 to December 31st
Cash Method of Accounting
An accounting method where revenue is recognized when the cash is received and expenses are recorded when cash is paid.
Chart of Accounts (COA)
List of all accounts a business uses to record transactions. The chart should be in financial statement order of Asset, Liabilities, Equity, Revenue and Expense to capture good financial information for making business decisions.
Contra Liability Account
An account with a debit balance that subtracts form a related liability account. Example: GST collected less GST paid on purchases (contra account).
Corporation
A company that is owned by shareholder(s)
CRA
Canada Revenue Agency - the federal agency that is responsible for collecting income taxes.
Credit
An entry on the right-hand side of the T account.
Creditor
A business or person to whom a debt is owed.
Current Assets
Assets that are cash or investments that are expected to be converted to cash within a year’s time.
Current Liabilities
Debts that are expected to be paid within a year.
Debit
An entry on the left-hand side of a T account.
Discrepancy
Difference or disagreement
Double Entry Bookkeeping
A system of bookkeeping that requires at least two entries. Each transaction must have a debit and a credit entry and must be in balance.
Entity
Something that exists independently.
Equity
The portion of the business assets to which the owner has direct claim.
Expenses
The costs incurred in earning revenue.
Financial Statement
Reports that summarize important financial accounting information about your business; includes the balance sheet.
Fiscal Year
Is a 12-month period used by a business for determining annual net income or loss. It may or may not be a calendar year.
GAAP
Generally Accepted Accounting Principles
General Journal
A journal that is used to record many different types of transactions.
General Ledger
Ledger that contains a separate record for each asset, liability, equity, revenue and expense account.
GST
Goods and Service Tax - a % that applies to services as well as goods. Is mandated by the federal government and doesn’t change provincially/ territorially.
HST
Harmonized Sales Tax - Combines the Provincial Sales Tax and the Goods and Services Tax into one tax.
Inventory
Goods and materials that a business buys and sells.
Invoice Processing
Handling of incoming invoices for arrival to post.
Journal
Entries or transactions that are recorded, the accounts to be debited and credited and the amounts.
Journalizing
The process of recording entries into the journal.
Liabilities
Moneys or payables a business owes to a third party.
Ledger
Contains a record of business transactions.
Matching Principle
A business must record its revenues and expenses in the same accounting period for the given transaction.
Monetary
Relating to the value of money.
Net Income
The amount remaining when expenses are deducted from revenue, also called the bottom line.
Net Loss
The amount remaining when expenses are deducted from revenue.
Normal Balance
The accounts types balance, debit or credit, that the account is normally expected to be in.
Partnership
A business that has two or more owners.
Pre-Paid Expenses
Expenses paid in advance and recorded as an Asset.
Posting
The process of recording information from the journal to the ledger.
Posting Reference
A reference number corresponding the journal to the ledger
PST
Provincial Sales Tax - mandated individually by each Provincial gov.
QST
Quebec Sales Tax
RST
Retail Sales Tax
Revenue
Income that a business receives from its normal business activities, normally from the sale of goods and services.
Service Business
A business that sells a service (in-tangible goods); examples include consults, accountants and lawyers.
Sole Proprietor
A person does business in their own name and is a one owner of a business.
Sub-Ledger
Is a ledger or a listing of a General Ledger Account; Example Accounts Payable sub-ledger total will match the total Accounts Payable General Ledger total.
T Account
Like a ‘T’ and is used to represent General Ledger account.
Transaction
The change of financial position for two or more businesses. Examples include purchasing inventory and supplies, selling services and products.
Trial Balance
Is a two-column list of all the businesses accounts in order their balances with a debit or Credit.
Vendor or Supplier
Anyone who supplies goods or services to a business.
Verify
To review or to test accuracy.
