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.
