Condensed Accounting Flashcards
Gross margin/gross profit
Net sales minus the cost of goods sold
General ledger
The book of accounts
General Journal
A book of original entry in which any business transactions is recorded in chronological order
Fixed liabilities/long-term liabilities
Liabilities that are not due and payable within one year
Fixed assets/long-term assets
Property of a relatively permanent nature, used in the operation of a business and not intended for resale
Land, building, equipment
FICA
Federal insurance contributions act
- A federal act requires most employers and employees to pay taxes to support the federal Social Security program
Expenses
A decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenue
Employee
One who’s under the control and direction of an employer, with regard to the performance of employment
Drawing account/owner withdrawals
Hey, separate owners equity account, in which withdrawals of cash or other assets by the owner for personal use are recorded
Double entry bookkeeping/double entry accounting
The process of recording, equal debits and credits for a single business transaction
Depreciation expense
That portion of the original cost of a fixed asset that is assigned as an expense to the reporting. Expected to benefit from its use.
Depreciation
The loss of 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 fixed asset will help produce during it’s useful life
Deposits in transit
Deposits, they have been made an edit to depositors checkbook, but not yet been listed on the bank statement
Debit balance
A condition that occurs when the total of the debits in the account is larger than the total of the credits in that account
Debit
The left side of a standard account
Abbreviation: DR
Current liabilities
Death of a business that are generally paid within one year
Current assets
Cash of other assets that will be converted into cash or consumed within one year
Current ratio
Current assets, divided by current liabilities
Creditor
A business or individual to whom it is owed
Credit memorandum
A source document that grants credit to a buyer for purchase return or purchase allowance; items the bank add to the account balance
Credit balance
A condition that occurs when the total of the credits in account is larger than the total of the debit in that account
Credit
The right side of a standard account
Abbreviation: CR
Closing entries
Entries made at the end of each reporting period to transfer the balance of the temporary owners equity’s accounts to the permanent owners equity account into reduce the balance in the temporary owners equity accounts to zero in preparation for the next accounting period
Chart of accounts
A list of all the account titles in the account numbers assigned to them
Cash basis, accounting
In accounting practice, in which revenue is not recognized in the accounting records until received, and in which expenses are not recognized until paid
Cash
Coins, currency, paper, money, checks, credit card, receipts, and money orders received from others, as well as money deposited in the bank
Capital/net worth/owners equity/proprietorship
The amount by which the total assets exceed the total liabilities of a business; and owners financial interest in a business
Cancelled check
A check which has been paid by the bank and returned to the drawer for recordkeeping
Business papers/source documents
The first record of a business transaction, such as check, stubs, receipts, sales, invoices, purchase invoices, cash register tapes, etc.
Book value/undepreciated cost
The cost of a fixed asset less it’s accumulated depreciation
Bookkeeping
The recording of financial information in a prescribed manner
Bookkeeper/information processor
One who is involved in the process of recording financial information in a prescribed manner
Bank statement reconciliation
The process by which the depositor attempt to reconcile the bank statement, balance with the checkbook balance
Bank statement
An itemized listing, prepared by the bank of additions to the subtractions from a depositors account
Balance sheet/statement of financial position/statement of financial condition
A formal financial statement, illustrating the assets, liabilities, and owners equity of a business as of a specific date
Bad debts expense, uncollectible accounts expense/loss from uncollectible accounts
Accounts receivable that are uncollectible
Assets
Property of monetary value owned by business
Allowance for bad debts/allowance for doubtful accounts
A contra asset account utilized to accumulate totals against accounts receivable
Age of inventory
Measures the average time required to sell inventory
Calculation: 365 days/inventory turnover
Age of accounts receivable
Measures the average time required to collect receivables
Calculation: 365 days/accounts receivable turnover
Adjusted trial balance
A trial balance taken after adjusting entries has been recorded
Accrual accounting
Recording in each fiscal period Applicable expenses, whether paid or not, and income earned, whether collected or not.
Accounts receivable turnover
Measures how many times per year receivables are collected
-Calculation: net credit sales/average accounts receivable
Accounts receivable
An unwritten promise by a customer to pay, at a later time, for goods sold, or services rendered
Accounting equation
Assets= liabilities + owners equity
Accounting cycle
The process involved in journaling, posting to the ledger, taking a trial, balance, preparing accounts, making adjusting and closing entries, and preparing a post closing trial balance
Accounting
A language of business employee to communicate financial information, based upon analyzing, recording, classification, summarization, recording, and interpretation of financial data
Accountant
One who is concerned with the design of the system of records, the preparation of records, based upon the recording data, and the interpretation of the records
Account
A device for recording the changes (increases or decreases) in the fundamental accounting elements
Account Balance
The difference between the total debits and the total credits in an account
Accounts Payable
An unwritten promise to pay creditors for property, such as merchandise, supplies, or equipment, purchased on credit, or for services received on credit
Net Sales
Sales - sales returns and allowances - sales discounts
