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.
