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Accounting1 Flashcards

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1
Q

Account

A

A device for recording changes (increases or decreases) in fundamental accounting elements.

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2
Q

Account Balance

A

The difference between total debits and total credits in an account.

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3
Q

Accountant

A

One concerned with the design of the system of records, the preparation of reports based on recorded data, and the interpretation of reports.

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4
Q

Accounting Cycle

A

The process that involves 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 every fiscal period.

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5
Q

Accounting Equation

A

Assets equals liabilities plus owner’s equity (capital).

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6
Q

Account Payable

A

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

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7
Q

Account Receivable

A

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

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8
Q

Accounts Receivable Turnover

A

Measures how many times per year receivables are collected. Calculation: (net credit sales divided by average accounts receivable) & (average accounts receivable equals beginning accounts receivable minus ending accounts receivable divided by 2).

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9
Q

Accrual Accounting

A

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

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10
Q

Accrued Expense

A

An expense incurred by operating a business during an accounting period but not yet paid.

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11
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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12
Q

Acid Test Ratio/Quick Ratio

A

Quick assets divided by current liabilities.

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13
Q

Activity Analysis

A

Measures how efficiently a firm utilizes its assets.

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14
Q

Adjusted Trial Balance

A

The trial balance taken after adjusting entries have been recorded.

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15
Q

Adjusting Entries

A

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

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16
Q

Age of Accounts Receivable

A

Measures the average time required to collect receivables. Calculated: (360 days divided by accounts receivable turnover).

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17
Q

Allowance for Doubtful Accounts (Allowance for Bad Debts)

A

A contra account used to accumulate totals against accounts receivable.

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18
Q

Analyzing

A

Determining the fundamental significance of business transactions so that financial information may be properly processed.

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19
Q

Assets

A

Property of monetary value owned by a business.

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20
Q

Bad Debts Expense/Uncollectible Accounts Expense/Loss from Uncollectible Accounts

A

Accounts receivable that are uncollectible.

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21
Q

Balance Sheet/Statment 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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22
Q

Bank Draft

A

A check drawn by a bank on another bank in which it has funds on deposit.

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23
Q

Bank Statement Reconciliation

A

The process by which a depositor verifies agreement between his check book balance and the bank statement balance.

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24
Q

Bank Statement

A

An itemized list prepared by the bank of additions to and subtraction from the depositor’s account.

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25
Q

Banker’s Method/360 Day Method

A

A method for computing interest based on the assumption that there are 360 days in a year.

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26
Q

Blank Endorsement

A

A check that only contains the signature of the endorser, thereby enabling any holder of the check to claim its payment.

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27
Q

Bookkeeper/Information Processor

A

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

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28
Q

Bookkeeping

A

The recording of financial information in a prescribed manner.

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29
Q

Book Value/Undepreciated Cost

A

The cost of a fixed asset minus its accumulated depreciation.

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30
Q

Budget

A

A formal written statement, which may be based upon adjusted historical data, of management’s plans for the future expressed in financial terms.

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31
Q

Calendar Year

A

A 12 month period beginning January 1 and concluding on December 31.

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32
Q

Cancelled Check

A

A check that has been paid by the bank and returned to the drawer for record keeping.

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33
Q

Capital

A

Owner’s Equity.

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34
Q

Cash

A

Coins, currency (paper money), checks, credit card receipts, money orders received from others, and money deposited in the bank.

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35
Q

Cash Basis Accounting

A

An accounting practice in which revenues are not recognized in the accounting records until received, and in which expenses are not recognized until paid.

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36
Q

Cash Discounts

A

Discounts from quoted price as an inducement for prompt payment of invoices.

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37
Q

Cash Payments/Cash Disbursements

A

Money or money substitutes paid.

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38
Q

Cash Receipts Journal

A

A book of original entry in which only cash receipts are recorded.

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39
Q

Cash Short and Over

A

A special ledger account used to keep track of unexplained shortages or overages of cash.

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40
Q

Cashier’s Check

A

A check drawn by the bank on its own funds, signed by a representative of the bank, and made payable to a third party.

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41
Q

Certified Check

A

A check that carries the guarantee of the bank that sufficient funds are available to pay the check when it is presented.

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42
Q

Certified Public Accountant/C.P.A.

A

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

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43
Q

Chart of Accounts

A

A list of all the account titles and the account numbers assigned to them.

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44
Q

Check

A

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

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45
Q

Check Stub

A

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

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46
Q

Chronological

A

In accounting, to record in order of time.

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47
Q

Classifying

A

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

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48
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, thereby reducing the balance in the temporary owner’s equity accounts to zero in preparation for the next accounting period.

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49
Q

Combination Journal

A

A book of original entry which combines into one journal the features of the two-column general journal and a special journal.

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50
Q

Compound Journal Entry

A

An accounting entry that involves more than 2 accounts.

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51
Q

Contra Account

A

An account designed to accumulate totals to offset a related account.

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52
Q

Credit

A

The right side of a standard account.

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53
Q

CR.

A

The abbreviation for credit.

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54
Q

Credit Balance

A

A condition that occurs when the total credits in an account is larger than the total debits in that account.

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55
Q

Credit Memorandum

A

A source document that grants credit to a buyer for purchase return or purchase allowance.

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56
Q

Creditor

A

A business or individual to whom a debt is owed.

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57
Q

Cross Referencing

A

The process of entering the journal page number in the ledger and the ledger account number in the journal.

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58
Q

Current Assets

A

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

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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 debits in an account is larger than the total credits of that account.

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61
Q

Debtor

A

The business or individual who owes a debt.

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62
Q

Deposits in Transit

A

Deposits that have been made and added to the depositor’s check book, but which are not yet listed on the bank statement.

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63
Q

Deposit Ticket/Deposit Slip

A

A bank form which lists the cash items (currency and coin) and individual checks to be deposited.

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64
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 it will help produce during its useful life.

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65
Q

Depreciation Expense

A

A 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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66
Q

Disbursement

A

A payment.

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67
Q

Discount Period

A

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

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68
Q

Dishonored Check

A

A check not paid by the bank when properly presented.

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69
Q

Double Entry Accounting/Double Entry Bookkeeping

A

A process for recording equal debits and credit for a single business transaction.

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70
Q

Drawee

A

A person or concern, usually a bank, that has been ordered to make a payment of a check or draft.

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71
Q

Drawer

A

A person (depositor) who signs a check, ordering a payment to be made.

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72
Q

Drawing Account/Owner Withdrawal

A

A separate owner’s equity account in which withdrawals, 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

Endorsement

A

The signature of the endorser, which endorses the transfer of money from the endorser to the payee.

75
Q

Endorser

A

A person or company whose name is written on the back of a check.

76
Q

E.O.M.

A

The abbreviation for end of the month.

77
Q

Expense

A

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

78
Q

Face of Note

A

The principal sum the maker of a note promises to pay.

79
Q

Federal Income Tax Withholding

A

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

80
Q

Federal Insurance Contributions Tax (FICA)

A

The federal act which requires most employers and employees to pay taxes to support the federal social security program.

81
Q

Federal Unemployment Tax Act (FUTA)

A

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

82
Q

Final Processing/Reporting

A

The process of communicating the results achieved during the accounting period to others.

83
Q

Fiscal Period

A

A period of time covered by an income statement.

84
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.

85
Q

Fixed Liabilities/Long Term Liabilities

A

Liabilities that are not due and payable within one year.

86
Q

Footing/Pencil Footing

A

A total written in small pencil figures, under the last entry in a column of an account.

87
Q

General Journal

A

A book of original entry in which business transactions are recorded in chronological order.

88
Q

General Ledger

A

The book of accounts.

89
Q

Gross Earnings/Gross Pay

A

Income before any deductions have been made.

90
Q

Gross Profit/Gross Margin

A

Net sales minus the cost of goods sold.

91
Q

Gross Profit Percentage

A

Gross Profit divided by net sales.

92
Q

In Balance

A

A condition in which the total debits and total credits in an account are equal.

93
Q

Income/Revenue

A

An inflow of assets as a result of selling a product or providing a service.

94
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.

95
Q

Income Tax

A

A tax levied on the earnings of individuals and business 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 or developments that occur, usually taking the form of analysis and comparisons.

100
Q

Inventory Turnover

A

The number of times the average inventory has been sold or used up (turned over) during a period. Calculation: (365/COGS for the period/Average inventory) & (Average inventory = Beginning inventory + Ending inventory / 2)

101
Q

Inventory

A

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

102
Q

Journalizing

A

The process of recording business transactions in a journal.

103
Q

Ledger

A

A book of accounts.

104
Q

Liabilities

A

Any debt that a business owes.

105
Q

Liquidity Analysis

A

Measures the ability of the firm to meet its current obligations.

106
Q

Maker

A

An individual who promises to pay on a promissory note; an individual who signs a promissory note.

107
Q

Maturity Date

A

The date on which payment is due on a promissory note.

108
Q

Merchandise/Inventory

A

Goods purchased for resale at a profit.

109
Q

Mortgage Payable

A

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

110
Q

N.S.F.

A

The abbreviation for not sufficient funds.

111
Q

Net Income/Net Profit

A

The difference between gross profit and expenses when gross profit is larger.

112
Q

Net Loss

A

The difference between gross profit and expenses when expenses are larger.

113
Q

Net Pay/Net Earnings

A

Gross pay less payroll deductions; employee’s take home pay.

114
Q

Net Purchases

A

Purchases minus purchase returns and allowances minus purchase discounts.

115
Q

Net Sales

A

Sales minus sales returns and allowances minus sales discount.

116
Q

Note Payable

A

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

117
Q

Note Receivable

A

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

118
Q

Operating Expenses/Overhead

A

Expenses incurred in the normal operation of a business.

119
Q

Original Cost Basis

A

The amount originally paid for a depreciable asset.

120
Q

Other Expenses

A

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

121
Q

Other Income

A

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

122
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.

123
Q

Owner’s Equity/Net Worth/Capital/Proprietorship

A

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

124
Q

Overdraft

A

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

125
Q

Payee

A

A person or company who will receive payment on a promissory note, check, draft, or money order.

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-Closing Trial Balance

A

A work paper prepared after all the owner’s temporary 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 that are considered to be assets when acquired, but which will become expenses when they are consumed or expired.

132
Q

Principal

A

The face value of a promissory note upon which interest is computed.

133
Q

Profit Margin

A

Net income divided by net sales. It measures how much out of every dollar of sales a company actually keeps in earnings.

134
Q

Profitability Analysis

A

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

135
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.

136
Q

Proving the Journal

A

A process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page.

137
Q

Proving Cash

A

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.

138
Q

Purchase Invoice

A

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

139
Q

Purchase Order

A

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

140
Q

Purchase Requisition

A

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

141
Q

Purchases Discount

A

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.

142
Q

Purchases Journal

A

A book of original entry used to record purchases of merchandise on credit only.

143
Q

Purchases Returns and Allowances

A

A temporary owner’s equity contra account used to record the return of merchandise to the manufacturer or supplier as a result of material defects in workmanship and/or inferior product quality.

144
Q

Quarterly

A

A three-month period.

145
Q

Quick Assets

A

Cash, marketable securities, accounts receivable, notes receivable.

146
Q

Rate

A

The annual percentage rate used to compute interest.

147
Q

Recording/Data Entry

A

The committing of a business transaction into writing.

148
Q

Restrictive Endorsement

A

An endorsement that limits the use of funds to the purpose stated (E.g. “for deposit only”).

149
Q

Retail Sales Tax

A

A tax imposed on tangible personal property sold at retail.

150
Q

Salary

A

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

151
Q

Sales

A

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

152
Q

Sales Discount

A

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

153
Q

Sales Invoice

A

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

154
Q

Sales Journal

A

A book of original entry used for the recording of sales of merchandise on credit only.

155
Q

Sales Returns and Allowances

A

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

156
Q

Source Document/Business Paper

A

The first record of business transaction (e.g. check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.).

157
Q

Special Journal

A

A journal designed to accumulate data about only one kind of business transaction.

158
Q

Statement of Account

A

A report sent to each customer, usually at the end of the month, which indicates the status of their account.

159
Q

Statement of Owner’s Equity/Statement of Net Worth

A

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

160
Q

Straight Line Depreciation

A

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.

161
Q

Stop Payment Order

A

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

162
Q

Summarizing

A

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

163
Q

Supplies

A

A type of asset that will be consumed as it is used (e.g. embalming supplies and office supplies).

164
Q

S.U.T.A.

A

The abbreviation for state unemployment tax act.

165
Q

T Account

A

A skeleton form of an account used for instructional purposes.

166
Q

Take Home Pay/Net Pay

A

The amount of pay after deductions (income taxes, F.I.C.A. taxes, etc.) have been subtracted.

167
Q

Tangible Assets

A

Those assets that can be appraised by value or seen or touched.

168
Q

Temporary Owner’s Equity Accounts

A

Accounts used to accumulate income, expenses, and owner’s withdrawals for one accounting period only.

169
Q

Time/Term of Note

A

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

170
Q

Transaction Analysis

A

The effect of transactions on the accounting elements.

171
Q

Transaction

A

Any activity of a business enterprise that involves the exchange of values.

172
Q

Transposition Error

A

An amount written with digits in incorrect order.

173
Q

Trial Balance

A

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

174
Q

Useful Life

A

The estimated life of a fixed asset.

175
Q

W-2 Form

A

Wage and Tax Statement; a report furnished by the employer for each employee indicating gross earnings and deduction for income and F.I.C.A. taxes.

176
Q

W-4 Form

A

Employee’s Withholding Allowance Certificate.

177
Q

Wages

A

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

178
Q

Worksheet

A

An expanded trial balance utilized for computing, classifying, and sorting account balances before preparing the formal financial statements.

Finance (8 decks)

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