Glossary Flashcards
Compare two sets of records at the end of a particular accounting period. Verify that account balances are correct, identify discrepancies, and make adjustments to the account as required in order to record the correct values in the books.
Account Reconciliation
Keeps track of business transactions
and financial records to issue financial statements and
determine how a business is doing on a financial level .
Accountant
Money a business owes to others for goods or services
Accounts Payable
Compare statements or invoices provided by vendors to the accounts payable in the books. Verify there are no discrepancies in the amount a vendor is charging for the goods or services received, and the amount recorded in the books matches the amount charged by the vendor.
Accounts Payable Reconciliation
Money that is owed to a business for providing a good or service.
Accounts Receivable
Accounts receivable aging is a periodic report that categorizes a business’s accounts receivable according to the length of time an invoice has been outstanding. It is used as a gauge to determine the financial health and reliability of a business’s customers.
Accounts receivable aging report
Receivables, loans, or other debt that will not be paid by a debtor.
Accounts uncollectible
An allowance for doubtful accounts is considered a “contra asset,” because it reduces the amount of an asset, in this case the accounts receivable. The allowance, sometimes called a bad debt reserve, represents management’s estimate of the amount of accounts receivable that will not be paid by the customers.
Accounts receivable doubtful
Compare the outstanding customer invoices and balances to the accounts receivable as entered in the general ledger. Verify amounts, uncover errors and irregularities, and identify fraudulent activitiy.
Accounts receivable reconciliation
An entry to record a future revenue or expense in the current period, even if moeny hasn’t been paid or received yet.
accrual
Revenues and expenses are reported or recognized in financial reports when they are EARNED OR INCURRED, rather than when the payment is made or received.
Accrual Accounting
the total amount of depreciation expense that has been allocated for an asset since the asset was put into use.
Accumulated depreciation
Listing of the ending balances in all accounts after adjusting entries have been prepared
Adjusted trial balance
Creating new entries to record depreciation and accrual
adjustments; these are provided to bookkeepers by a
CPA or accountant
Adjusting Entries
The structure process of paying both the principal and interest over a period of time.
Amortization
Anything the business owns of value or a resource of value that has the potential to be transformed into cash.
Assets
Inventory value is based on the average cost of all materials purchased during the reporting period.
Average cost method (AVCO)
the term used for any loans or outstanding
balances that a business deems uncollectible.
Bad debt
recognized when a receivable is
no longer collectible because a customer is unable to fulfill their obligation to pay an outstanding debt due to bankruptcy or other financial problems
Bad debt expenses
a financial statement that reports a
business’s assets, liabilities, and equity at a specific point in time.
Balance sheet
A total amount in an account at any given time
Balances
(Account Balances)
A bank form used to document the money the customer intends to deposit into their bank account.
bank deposit receipt (slip)
Compare the books to the statement issued by the bank. Compare every transaction in the bank statement to the business’s internal records (including bank deposit slips and canceled checks) to verify both records are matching
Bank Reconciliation
Record to show what business owes vendor for goods/services
Bill
The ledger balance as of a certain date.
Book Balance
__________ document transactions, manage accounts, and record financial data.
Bookkeeper(s)
A forecast of revenue and expenses for a future period of time
Budget
A business structure that is owned by one of more shareholders, but they do not carry any personal liability.
C Corp
The financial monies the business uses for operations and growth, such as cash, debt, or equity.
Capital
The money or assets given to the business by the owner or partners
Capital Contribution
Assets that exist in cash form or can be immediately converted into cash.
Cash
the collection of money, typically from a customer, which increases (debits) the cash balance recognized on a business’s balance sheet.
Cash Payments
transactions where the customer pays for the goods or services immediately with cash, check, or a credit or debit card.
Cash sales
Revenues and expenses are reported or recognized on financial reports when the payment is RECEIVED OR MADE, rather than when work is performed.
Cash-basis accounting.
Lists all of the accounts and sub-accounts used to categorize transactions.
Chart of accounts
a monetary instrument directing the financial institution to pay the bearer a specified sum of money.
Check
Completing all necessary accounting tasks and procedures at the end of a financial period including finalizing financial statements, reconciling accounts, making adjusting entries, and preparing the accounts for the next accounting period
Close the books
A debt-based funding arrangement between a business and a financial institution (tradional model)
Commercial Loan
Refers to the capital the business received in exchange for issueing stock to stockholders.
Common Stock
Two or more errors cancel each other out, for example fixed assets account is incorrectly understated $600 and rent account is incorrecly overstated $600.
Compensating Error
The correct amount is posted to the correct accounts but the debits and credits are reversed, for example debiting an account that should have been credited.
Complete reversal of entries
Clients entrust bookkeepers with very sensitive financial information, and a business owner must be able to trust that their bookkeeper will treat their data with the utmost care.
Confidentiality
