Final Vocab (chapters 1-8)

Question 1

A formal report that shows what an individual owns, what an individual owes, and the difference between the two

Answer 1

net worth statement

Question 2

Planning, recording, analyzing, and interpreting financial information

Answer 2

accounting

Question 3

An equation showing the relationship among assets, liabilities, and owner’s equity

Answer 3

accounting equation

Question 4

A business activity that changes assets, liabilities, or owner’s equity

Answer 4

transaction

Question 5

A planned process for providing financial information that will be useful to management

Answer 5

accounting system

Question 6

The standards and rules that accountants follow while recording and reporting financial activities

Answer 6

GAAP

Question 7

The account used to summarize the owner’s equity in the business

Answer 7

capital account

Question 8

The account remaining after the value of all liabilities is subtracted from the value of all assets

Answer 8

owner’s equity

Question 9

A record summarizing all the information pertaining to a single item in the accounting equation

Answer 9

account

Question 10

The difference between personal assets and personal liabilities

Answer 10

personal net worth

Question 11

Anything of value that is owned

Answer 11

asset

Question 12

A sale for which cash will be received at a later date

Answer 12

sale on account

Question 13

Assets taken out of a business for the owner’s personal use

Answer 13

withdrawals

Question 14

A formal written document that describes the nature of a business and how it will operate

Answer 14

business plan

Question 15

A business owned by one person

Answer 15

proprietorship

Question 16

The use of ethics in making business decisions

Answer 16

business ethics

Question 17

A business that performs an activity for a fee

Answer 17

service business

Question 18

The difference between assets and liabilities

Answer 18

equity

Question 19

Financial reports that summarize the financial conditions and operations of business

Answer 19

financial statements

Question 20

An amount owed by a business

Answer 20

liability

Question 21

A person or business to whom a liability is owed

Answer 21

creditor

Question 22

A decrease in owner’s equity resulting from the operation of a business

Answer 22

expense

Question 23

An increase in owner’s equity resulting from the operation of a business

Answer 23

revenue

Question 24

The amount in an account

Answer 24

account balance

Question 25

The name given to an account

Answer 25

account title

Question 26

Financial rights to the assets of a business

Answer 26

equities

Question 27

The principles of right and wrong that guide an individual in making decisions

Answer 27

ethics

Question 28

Information for each transaction recorded in a journal

Answer 28

entry

Question 29

Recording transactions in a journal

Answer 29

journalizing

Question 30

A form on which a brief message is written to describe a transaction

Answer 30

memorandum

Question 31

A business from ordering a bank to pay cash from a bank account

Answer 31

check

Question 32

A business paper from which information is obtained for a journal entry

Answer 32

source document

Question 33

A form for recording transactions in chronological order

Answer 33

journal

Question 34

An invoice used as a source document for recording a sale on account

Answer 34

sales invoice

Question 35

A business form giving written acknowledgement for cash received

Answer 35

receipt

Question 36

The recording of debit and credit parts of a transaction

Answer 36

double-entry accounting

Question 37

A form describing the goods or services sold, the quantity, the price, and the terms of sale

Answer 37

invoice

Question 38

A check that a bank refuses to pay

Answer 38

dishonored check

Question 39

A check with a future date on it

Answer 39

postdated check

Question 40

A form showing proof of a petty cash payment

Answer 40

petty cash slip

Question 41

A bank account from which payments can be ordered by a depositor

Answer 41

checking account

Question 42

An endorsement consisting only of the endorser's signature

Answer 42

blank endorsement

Question 43

A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

Answer 43

debit card

Question 44

A petty cash on hand amount that is more than the recorded amount

Answer 44

cash over

Question 45

A signature or stamp on the back of a check, transferring ownership

Answer 45

endorsement

Question 46

A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents

Answer 46

electronic funds transfer

Question 47

A report of deposits, withdrawals, and bank balances sent to a depositor by a bank

Answer 47

bank statement

Question 48

An amount of cash kept on hand and used for making small payments

Answer 48

petty cash

Question 49

A bank from listing the checks, currency, and coins that an account holder is adding to the bank account

Answer 49

deposit slip

Question 50

An endorsement restricting further of a check's ownership

Answer 50

restrictive endorsement

Question 51

A petty cash on hand amount that is less than the recorded amount

Answer 51

cash short

Question 52

A check that has been paid by the bank

Answer 52

canceled check

Question 53

a check that cannot be processed because the maker has made it invalid

Answer 53

voided check

Question 54

A check dishonored by the bank because of insufficient funds in the account of the maker of the check

Answer 54

non-sufficient funds check

Question 55

An endorsement indicating a new owner of a check

Answer 55

special endorsement

Question 56

Reporting income when it is earned and expenses when they are incurred

Answer 56

accrual basis of accounting

Question 57

Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period

Answer 57

adjustment

Question 58

The difference between total revenue and total expenses when total revenue is greater

Answer 58

net income

Question 59

The length of time for which a business summarizes financial information and reports its financial performance

Answer 59

fiscal period

Question 60

Reporting income when the cash is received and expenses when the cash is paid

Answer 60

cash basis of accounting

Question 61

A columnar accounting form used to summarize the general ledger information needed to prepare financial statements

Answer 61

work sheet

Question 62

Journal entries recorded to update general ledger accounts at the end of a fiscal period

Answer 62

adjusting entries

Question 63

Cash paid for an expense in one fiscal period that is not used until a later period

Answer 63

prepaid expense

Question 64

A financial statement showing the revenue and expenses for a fiscal period

Answer 64

income statement

Question 65

The difference between total revenue and total expenses when total expenses are greater

Answer 65

net loss

Question 66

A financial statement that reports the value of a business;s assets, liabilities, and owner's equity on a specific date

Answer 66

balance sheet

Question 67

A proof of the equality of debits and credits in a general ledger

Answer 67

trial balance

Question 68

A fiscal period consisting of 12 consecutive months

Answer 68

fiscal year