Glossary - Sage 50 Accounting Flashcards
Account
A form in which transactions are recorded individually.
Each account has a name (e.g. Cash, Accounts Receivable) & is identified with a number (eg. 1010 to represent Cash, 1200 to represent Accounts Receivable).
An account will have a left side (Debit) & a right side (Credit).
Accounts are contained in a ledger.
Account Class
An identification for specific groups of accounts.
The class identifies each group’s main purpose or function;
Cash, Bank, Payable, Debit, Expense, etc.
(refer to Exercise 4A-4, step 14 & Fig. 4A-32).
This is different from Account Types or Account Numbers.
Account Numbers
A range of numbers established by Sage 50 Accounting for each particular type of account.
(Asset, Liability, Equity, Revenue, & Expense)
This system is used in determining the normal balance of each account, & where the account is located in the Balance Sheet or Income Statement.
Account Type
An identification code, or category, for each account;
e.g. Asset, Liability, Equity.
Each code has a specific function & placement on financial statements.
Accrual
Recording the revenues & expenses for goods received and/or services completed but not paid for in a particular accounting period;
e.g. salaries/wages owed to employees at the end of a period.
The entries are normally reversed in the next period.
The Accrual Method is the generally accepted accounting treatment in Canada as it more accurately reflects revenues & expenses in a specific period.
The alternative is to record revenue or expenses when paid (Cash Method).
The Cash Method, however, is not acceptable for income tax purposes in Canada.
Accrued Expenses
Expenses incurred in the period but no invoice or bill has been received;
(e.g. electricity or water bills attributable to the month ending)
The amount is estimated & recorded for the month ending.
Accrued Revenue
Revenue earned in the period, but no sales invoice has been issued;
(e.g. a partial shipment made but an invoice was not issued)
The amount is estimated & recorded for the month end.
Accrued Salaries/Wages
If the pay period spans two months (i.e. the pay period starts in one month & the pay date falls in the following month), the pay amounts that relate to the previous month are referred to as “accrued salaries/wages.”
Example: if the work week goes from December 29- January 4, the wages for December 29-31 must be accrued.
Adjustment
Journal entries recorded in order to bring the balance of an account up to date;
e.g. to transfer the Prepaid Insurance amount used or consumed during a period from the Asset account to the Insurance Expense account.
Advance
An amount of money “borrowed” by an employee against future wages/salaries.
This advance may be issued on a separate company cheque or it can be added to a regular paycheque.
If the employee agrees to repay the advance with regular payments, the firm will reduce the regular net pay by the agreed-upon repayment.
Advances are issued & repaid without any deductions for CPP, EI or Income Tax.
Advance to a new year
Sage 50 Accounting term that means advancing the Session Date to a new fiscal year.
-results in the transfer of the balances of all Revenues & Expenses to Capital account (sole proprietorship) or Retained Earnings (Corporation).
The closing entry is recorded automatically by the program when you perform year-end processing.
Advice
A detachable form on a cheque that provides the business receiving the cheque with details of the payment.
Aging
A process of sorting Accounts Receivable transactions in predefined categories:
30, 60, or 90 days based on the current session date;
E.g. an invoice dated 26 days before the session date would appear in the “30 day” column in the Accounts Receivable Customer Aged report.
Allocate
To divide (split) revenues and/or expenses to various divisions (projects, jobs, etc.).
By reviewing Division costs, the management can see the revenue, expense & profitability of each division.
Amortization
See Depreciation
Approval Stamp
A stamp on the back of the vendor invoice on which an authorized person in the purchasing department indicates the G/L account number(s) to which the invoice must be charged.
It is approved usually by showing the person’s name or initials, and dated.
Back ordered
Goods or merchandise ordered by a customer but currently not in stock.
The sales order will be filled at a later date when stock is available
Backup
A copy of your data on another medium such as a USB storage device, using a computer operating system such as Windows or specialized software.
If the original storage device is lost or damaged, you can restore the data from the backup copy.
Balance Sheet
A financial report that shows a business’s assets, liabilities & equity at a certain date.
Bank
A basic definition used in the context of this text is:
A financial institution that holds amounts of money for personal or commercial use.
Banking Codes: A (Adjustment)
for transactions posted as adjustments to a bank account.
Banking Codes: C (Cleared) Items
(matched deposits with depositor cheques) that are recorded in your General Ledger bank account & that have been processed by the bank (on the bank statement).
Banking Codes: D (Deposit Error)
is used for deposits that are recorded in your General Ledger bank account but which differ from the bank statement.
The difference must be recorded with a journal entry & assigned the Deposit Error code.
When both D codes are entered, they can be cleared with the C code.
The original deposit coded as a D & the error correction coded as a D can be cleared together with a C (cleared) code.
Banking Codes: N (NSF)
Non Sufficient Funds.
Cheques returned by the bank to the depositor when there is not enough money in the customer’s bank account.
Banking Codes: P (Payment Error)
is used for cheques that are recorded in your General Ledger bank account but which differ from the bank statement.
The difference must be recorded with a journal entry & assigned the Payment Error code.
When both P codes are entered, they can be cleared with the C code.
The original cheque, coded as a P, & the error correction, coded as a P, can be cleared together with a C (Cleared) code.
Banking Codes: R (Reversed)
When a cheque is received by the bank as a deposit, it is entered as a credit on the depositor’s bank statement.
When the cheque is cancelled (usually because of NSF), the entry in the depositor’s bank statement is reversed, so the entry is assigned the R (Reversed) code.
The reversing entry is normally recorded in the company’s Sales Journal.
A reversing entry is required & is then assigned the A (Adjustment) code.
Banking Codes: V (Void)
is used to identify cheques that were cancelled because they were issued incorrectly.
A reversing entry is required & is then assigned the A (Adjustment) code.
Bank Reconciliation
The process of determining & processing the differences in the company bank account(s) as shown in the company’s records, & the balance as shown on the bank statement.
Benefit
items such as dental plans, life insurance & drug plans, for which the firm pays the cost of the items, either in full, or partly shares the cost with its employees.
Cash
In business terms this refers to actual cash, cheque or credit card payment.
Cash Sale
Sale for which cash, cheque or credit card is received.
In many businesses these sales are recorded in a cash register & are summarized daily.
Clear
To remove (delete) paid vendor invoices from the data records.
Close the Books
See Advance to a new year
Close the year
See Advance to a new year
Codes
Abbreviations of words to indicate action taken.
The code Rv indicates a reversal;
the code Rt indicates a return item.
Commission
Amount of money earned by an individual working in sales, based on a percentage of Net Sales made by the individual.
The firm would keep records of sales by each staff member, & may pay the commission on a weekly, bi-weekly or any other agreed-upon time schedule.
Company Data
Transaction entries & general ledger files referring to one particular company, which are stored in one directory/ folder separate from data belonging to other companies.
Conversion
The change from one accounting system to another, usually from manual accounting to a computerized system, or from on computerized accounting software to another.
Conversion Date
See Earliest Transaction Date
Correction
An entry to correct errors in posting.
These entries are made on a regular basis & are not necessarily part of the month-end/ year-end procedures.
Cost Centre
Refers to a group of accounts where expenses & revenues are allocated & accumulated.
-can also mean a division/department in a company.
Credit Memo (Seller)
similar to an invoice sent to customers to advise them that the amount owed to your company has been reduced as a result of a return of goods or price reductions.
Customer Aged Report
A report of all amounts to be received from each customer in the CUSTOMERS subledger aged according to specified aging period;
e. g. Current, 30 days overdue, 60 days overdue.
- report may be listed in Summary (total owed by customer) or Detail (individual outstanding invoices per customer not paid in full).
Debit Memo
similar to an invoice sent to customers to advise them that the amount owed to your company has increased, usually as a result of errors in the original invoice, price changes that were overlooked in the original invoice or extra charges for NSF cheques.
Deductions
Amounts of money deducted from an employee’s earnings for items such as CPP, EI, Income Tax, charities or employee benefits.
Default
pre-set value;
e.g. the default date format is month, day, year, unless the user changes it.
Deposit
- ) A sum of money paid in advance by customers for a guarantee that goods will be reserved for them.
- ) Required of a new customer who has not yet established a good credit rating.
- ) From a regular customer who has had trouble making payments on previous orders.
(See Prepayment)
Depreciation
Represents the process of allocating the cost of the capital asset to expense over the useful life of the asset.
The cost minus expected salvage value is divided by the estimated life of the asset.
This amount would be the depreciation cost per year.
Distribute
See Allocate
Drive Letter
C:/ in a standalone hard drive computer system, or D or any letter after C: for a USB or other storage device.
The letter indicates that you are at the root directory of the current drive, or any letter after C in a network system, indicating that you are at the root directory of your current drive.
Earliest Transaction Date
is the date when the manual books are converted to the computer system, or converted from one computerized system to another;
e.g. May 31 month-end conversion. This is the conversion date as defined by Sage 50 Accounting.
Employer Health Tax (EHT)
is a payroll tax on remuneration paid to employees.
There is an exemption to the tax when the remuneration is less than $450,000 per year.
Expense
Purchase of goods not for resale or services used in running a business.
Export
A feature that allows you to transfer reports produced in Sage 50 into a format that can be used by other software programs.
e.g. PDF, Lotus 1-2-3, Excel, most word processing.
Finish Date
The end of the fiscal year.
Folders
A separate location, in Windows, where you can keep various reports or data files.
May also be called directories or subdirectories.
GAAP
Generally Accepted Accounting Principles are guidelines used by ethical practitioners in the Accounting field.
Garnishee
To deduct money from an employee’s paycheque, due to a legal Court Order.
Gross Margin Income Statement
Income Statement that breaks down the Expenses into two categories;
COGS & Expenses.
-can also be called the Gross Profit Income Statement.
Gross Pay
The amount of money earned by employees before deductions.
GST
Goods and Services Tax
GST Remittance
GST paid on Purchases is deducted from GST collected from Sales.
If GST collected on sales is larger, the difference must be paid (remitted) to the government.
If the reverse is true, a GST refund will be requested.
The GST remittance may be made monthly, quarterly or annually, depending on volume of business.
GST Remittance (equation)
GST collected from Sales - GST paid on Purchases = Amount to be remitted (or refund)
History
Account balances & other pertinent information in a module.
Historical information needs to be entered before the module can be set to Ready.
HST
Harmonized Sales Tax
HST Remittance
HST paid on Purchases is deducted from HST collected from Sales.
If HST collected from Sales is larger, the difference must be paid (remitted) to the government.
If the reverse is true, an HST refund will be requested.
The HST remittance may be made monthly, quarterly or annually, depending on volume of business.
HST Remittance (equation)
HST collected from Sales - HST paid on Purchases = Amount to be remitted (or refund)
Icon
A symbol, normally a graphic image that represents a menu item within Windows.
Import
To bring data into a file from another file or program;
e.g. importing data from an Excel worksheet into Sage 50 Accounting.
Income Statement
A financial report that shows revenues (earnings) less expenses (costs) resulting in net profit/loss for a period.
Integrated Accounting Software
A type of accounting software in which the subledgers are linked to the General Ledger.
When entries are posted in the subledgers, the General Ledger is updated.
Integration
See Linking
Interac
An association of financial institutions & other enterprises for the purpose of exchanging electronic financial transactions.
Inventory Adjustment
The decrease on increase of inventory in the INVENTORY & SERVICES module, due to a difference between the actual physical count on inventory & the computer records.
Inventory Assembly Costs
The costs of the parts used when a business takes a number of parts & makes them into a product for sale.
e.g. a number of different computer parts are made into a saleable computer system.
Invoice
A bill sent or given to a customer for goods or services sold.
Job
See Project
Job Cost
See Project
Journal Entry
The process of recording an accounting transaction, which may consist of one or more debit (DR) entries & one or more credit (CR) entries.
Total Debits must equal total Credits.
Linking
A feature of Sage 50 Accounting that allows you to enter a transaction in one module & automatically update other modules.
Logbook
A dated record of activities.
- will contain information on the material covered
- storage file name used for backup
Manual Cheque
- cheque written by hand & not printed.
- numbering system different from computer-generated cheques may be used for manual cheques.
Markup Method
A method used for calculating gross profit by the following formula:
(Selling Price - Cost)/Cost. [($100 - $60)/$60 = 66.67%]
Matching Principle
This accounting principle requires that if revenues earned in an accounting period are recorded, then expenses incurred to earn those revenues must also be recorded in that period.
Merchandise
Goods that are purchase or manufactured by a company for the purpose of resale.
Minimum
A field in the INVENTORY ledger window that allows you to enter the lowest number of items that must be in stock.
At any time, you can display a report of stock items that need to be reordered.
The Inventory Quantity report shows the amount below minimum quantity in the To Order column.
Module
Refers to a part of a software program designed for a specific function.
Month-End Processing
Entering adjustments & accruals, to match Revenue with Expenses during the period.
Net Pay
The amount of money earned by employees after deductions are taken off.
Also called take-home pay.
Network
Two or more computers connected directly or through a server, & able to share data files & peripheral equipment;
e.g. printers or scanners
NSF
Not Sufficient Funds:
A bank advice that a cheque received from a customer & deposited in your bank account was returned because the customer did not have enough money in their bank account to cover the cheque.
You would ask the customer to issue a new cheque.
O/L (Outside Labour)
The cost, to the company, of hiring individuals or companies outside the company (non-employees) to produce work/goods for sale, provide consulting services or make deliveries, etc.
Obsolescence
When an inventory item has become outdated by new technology or upgrade, it is described as being obsolete.
Normally, the realizable value (amount the item could be sold for) drops (in many cases below original cost), & an adjustment should be made to reflect this loss in value.
There are common accounting practices that should be followed in these cases.
Outstanding Cheque
Cheque issued by the company & recorded in the General Ledger that has not been cashed by the bank by the statement date.
Path
(pathname)
includes the computer drive & the folder/directory name directing the system to specific files.
Example: if you have a set of company files on drive C in a folder called PHOTOS, the path or pathname would be C:\01 PHOTOS\PHOTOS.
Payroll
The record of wages/salaries earned by each employee, less deductions, which is completed on a regular basis.
Periodic Inventory Method
When goods are purchased for resale, they are recorded in the Purchases Account in the COGS section of the Income Statement.
The COGS section (Ending Inventory account) is adjusted at various times (periodically) during the year, usually at month-end & year-end.
Perpetual Inventory Method
When goods are purchased for resale, they are recorded in an Asset account (INVENTORY).
When goods are sold, the INVENTORY account is reduced, & the COGS account is increased by the cost of the goods.
Physical Count
The actual counting of inventory in the store, warehouse, etc.
Physical Inventory
When a periodic inventory is conducted by counting, weighing, or measuring items of merchandise on hand.
- usually monthly, quarterly, semi-annually, yearly
- the amount of inventory on hand
This amount is set up as INVENTORY ON HAND on the Balance Sheet, & COGS Ending Inventory account is correspondingly reduced.
Post
To transfer the information recorded in a journal transaction to the appropriate subledger and/or general ledger, thus updating the company data.
Preferred Pricing
A reduction in the normal selling price of goods or services given to customers who buy a large amount (quantity) of merchandise and/or services.
Prepaid Expenses
expenses paid ahead of time;
e.g. leases, insurance, subscriptions, etc.
The amounts in these accounts are reduced by an amount that corresponds to the portion used or consumed in the period.
This amount is then entered as an expense.
Prepayment
An advance payment made to a vendor against a future invoice to show a commitment to purchase.
Project
A job, division, activity, or enterprise, e.g. building a house(s); or a cost centre, e.g. a department or a branch of the company.
-refers to a group of accounts where revenues & costs are allocated & accumulated.
PST
Provincial Sales Tax
In provinces that do not have HST, companies selling to the public have to collect PST, except from companies involved in wholesale distribution that have an exemption license.
(except Alberta, GST only)
Purchase
Includes transactions involving purchase of merchandise for resale, or the purchase of goods used to produce goods for resale.
Purchase Order (PO)
A business for issued by a company, usually the Purchasing Department, to place an order for goods or services with a vendor or supplier.
A PO is a formal request for goods or services to be shipped at a specified date, price & quantity.
Purchase Quote
A business form issued by the vendor (supplier) to advise the customer that it can & will supply the products and/or services listed at the prices quoted by the date specified.
Purchase Return
Reduces Purchases & are recorded as a negative purchase invoice.
QST
Quebec Sales Tax
Range of Dates
A time period, generally between two dates, in which data may be entered.
The transaction date must be on or between the two dates.
Ready
The last step in the conversion process is to set the module to Ready for recording transactions.
Before setting up a module from History to Ready mode, the total of individual subledger balances must agree with the corresponding General Ledger control accounts.
Reconciliation
See Bank Reconciliation
Reimbursement
An amount of money repaid to an employee for money the employee paid on behalf of the business;
e.g. travelling expenses, purchase of goods needed in a hurry, long-distance business calls from home phone, petty cash.
Release
Payment of vacation pay accumulated from prior periods.
Vacation pay is set up as a payable each pay period.
When vacation pay is released, the payable is reduced by the amount released to the employee.
Sage 50 calculates deductions as though the released amount is gross pay.
The employee receives a cheque for the vacation pay.
Relevé 1
Form provided to employers by the Quebec government for employers to indicate payroll information for each employee.
Reversing Entries
Accrued revenues & expenses that pertain to a particular accounting period are revered at the start of the next accounting period.
This results in a zero balance in the original General Ledger account in the new period or fiscal year when the revenue or expense is finally recorded.
Salary
A fixed amount paid to an employee every pay period, expressed usually in total annual amount;
e.g. $30.00 per annum.
Sales Order
A form issued to a customer to confirm that the goods or services listed on the Sales Quote are accepted & will be shipped as indicated on the Sales Order form.
Sales Quote
A form requested by a customer advising them of selling price(s) for goods (merchandise) or services.
Sales Return
Goods returned from a previous sale for a number of reasons;
e. g. wrong goods delivered, damaged goods received.
- entered in the RECEIVABLES module as a negative sale.
Services
A sale not involving goods, but the seller provides assistance or advice to the buyer.
Session Date
In Sage 50 Accounting, it is the actual working date when you are using the computer.
In this text, the simulated date is advanced on a regular basis for classroom use.
Sole Proprietorship
A business owned by one individual.
Standalone
A computer that is working on its own and not connected to a network.
Start Date
The beginning of the current calendar year, or fiscal year, or the date when the business started this year.
Supplier
Form provided to employers by Canada Revenue Agency (CRA).
The employer completes the form with a summary of each employee’s earning & deductions for the previous calendar year, & submits the four copies as follows:
- ) for CRA
- ) for the employee’s use in completing their personal tax return
- ) for the employee
- ) for the employer
T5018
Form required by CRA to be completed for payments made to businesses providing construction services.
TD-1
Form supplied by CRA to employers, to be completed by employees, which calculates the basic income exemption each employee is entitled to claim.
Take-home pay
See Net Pay
Template
A data file supplied with the software that contains a set of linked & non-linked General Ledger accounts with section & group headings.
Each of the templates has accounts that are similar in nature to specific businesses.
Term (of Sale)
The time allowed to pay an invoice;
e.g. net 30 days to pay the full amount within 30 days.
Terms of 2%/10, net 30 means that a 2% discount will be given if paid within 10 days, if not, full amount is due within 30 days.
Unearned Revenue
Money received from customers (clients) before the work (service) or goods are delivered to the client, usually a deposit received in advance;
e.g. prepaid subscriptions to a magazine company.
Unresolved Balance
The difference between the bank statement & the General Ledger bank account.
The difference may be from bank errors or errors in processing transactions in Sage 50 Accounting.
Vendor
A business for which another firm buys goods or services.
-also called Supplier
Vendor Aged Report
A report of all amounts owing to each vendor in the VENDORS subledger aged according to specified aging period;
e.g. Current, 30 days overdue, 60 days overdue.
The report may be listed in Summary (total owed) or Detail (individual per vendor).
Wages
Amount paid to an employee each pay period based on an hourly rate.
-includes overtime & any shift premiums
WCB
See Workers Safety Insurance Board
Wizard
A smart step-by-step help feature in software that takes you through the necessary procedure in completing a process.
e.g. setting up a new company
Workers Safety Insurance Board (WSIB)
As of January 1, 1998, in Ontario the name was changed from Workers Compensation Board (WCB).
Premiums paid by a company based on a percentage of employees’ gross earnings.
Various industries pay various rates.
Write-off
Journal entry to reduce an outstanding balance from a customer’s account when the amount is no longer collectable for any reason;
e.g. the customer is bankrupt or refuses to pay the amount.
Note: A part or the full amount of the outstanding amount may be written off.
WSBC
Work Safe BC
T4 Slip
Form provided to employers by Canada Revenue Agency (CRA).
The employer completes the form with a summary of each employee’s earning & deductions for the previous calendar year, & submits the four copies as follows:
- ) for CRA
- ) for the employee’s use in completing their personal tax return
- ) for the employee
- ) for the employer
Pay Period
specified time interval for which employees are paid.
usually weekly, bi-weekly, bi-monthly, monthly
