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Accounting > Second Quarter Final Study Guide > Flashcards

Second Quarter Final Study Guide Flashcards

1
Q

Sales returns and allowances

A

A temporary owners equity contra sales account used to record credit given to a customer for shortages or damaged goods

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2
Q

Sales discounts

A

A temporary owner’s equity contra sales account used to record discounts given to customers as an incentive for prompt payment

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3
Q

Sales

A

A temporary owners owners equity account used to record the earning of revenue

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4
Q

Purchases Returns and Allowances

A

A temporary owner’s equity contra purchases account utilized to record the return of merchandise to manufacturer or supplier as the result of material defects in workmanship and/or inferior product quality

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5
Q

Purchases Discounts

A

A temporary owner’s equity contra purchases account used to record discounts taken in inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices

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6
Q

Purchases

A

A temporary owner’s equity account used to record the buying of merchandise for resale

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7
Q

Purchase Requisition

A
  • A form used to request the responsible person or department to purchase merchandise or other property

(Ex. Funeral Director turns in arrangement forms to accountant who will pay for the merchandise.)

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8
Q

Purchase Order

A

A written order by a buyer for merchandise or other property specified in the purchase requisition

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9
Q

Petty cash fund

A

A fund of currency and coin established for the payment of small amounts of money

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10
Q

Outstanding checks

A
  • Checks you have written off your books, but the bank hasn’t written it off your books yet (ex. Employee hasn’t taken check to the bank yet.)
  • Checks that have been drawn and subtracted from the depositors checkbook, but which have not yet been presented to the bank for payment
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11
Q

NSF

A

Not sufficient funds

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12
Q

Net purchases

A

Purchases minus purchase returns and allowances minus purchase discounts

(purchases minus both contra accounts)

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13
Q

Net earnings/net pay/take home pay

A

Gross pay less payroll deductions; an employees take home pay

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14
Q

Mortgage payable

A

A long-term liability; a written promise that pledges real property as security for payment of a debt

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15
Q

Inventory turnover

A

The number of times the average in inventory has been sold or used up/turned over during the period
- Calculation: cost of good sold for period/average inventory

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16
Q

Inventory/merchandise

A

Goods purchased for resale at a profit

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17
Q

Independent contractor

A

Any person who agrees to perform a service for a fee, and who is not subject to the control of those for whom the service is performed

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18
Q

Gross margin/gross profit

A

Net sales minus the cost of goods sold

(sold a casket for $900-paid $200 to vendor to get it=$700 gross profit)

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19
Q

Fixed liabilities/long-term liabilities

A

Liabilities that are not due and payable within one year
- Mortgage

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20
Q

Fixed assets/long-term assets

A

Property of a relatively permanent nature, used in the operation of a business and not intended for resale
Land, building, equipment

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21
Q

FICA

A

Federal insurance contributions act
- social Security and Medicare
- A federal act requires most employers and employees to pay taxes to support the federal Social Security program

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22
Q

Employee

A

One who’s under the control and direction of an employer, with regard to the performance of employment

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23
Q

Deposits in transit

A

Deposits, that have been made an edit to depositors checkbook, but not yet been listed on the bank statement

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24
Q

Current liabilities

A
  • Debts of a business that are generally paid within one year
  • usually all the payable accounts except for mortgage
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25
Q

Current assets

A

Cash of other assets that will be converted into cash or consumed within one year
cash, A/R, Prepaid Insurance, Inventory, Supplies

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26
Q

Current ratio

A

Current assets, divided by current liabilities

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27
Q

Credit memorandum

A
  • Credit for a purchase return or allowance
    A source document that grants credit to a buyer for purchase return or purchase allowance; items the bank add to the account balance
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28
Q

Cancelled check

A

A check which has been paid by the bank and returned to the drawer for recordkeeping
- The bank pays it, voids the paper (cancels the check) and gives it back to you for recordkeeping

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29
Q

Bank statement reconciliation

A
  • Compare bank statements with your own books (and make sure they’re the same/balance out equally)
  • The process by which the depositor attempt to reconcile the bank statement, balance with the checkbook balance
30
Q

Bank statement

A

An itemized listing, prepared by the bank of additions to the subtractions from a depositors account

31
Q

Bad debts expense, uncollectible accounts expense/loss from uncollectible accounts

A

Accounts receivable that are uncollectible

32
Q

Allowance for bad debts/allowance for doubtful accounts

A

A contra asset account utilized to accumulate totals against accounts receivable

33
Q

Age of inventory

A

Measures the average time required to sell inventory
- Calculation: 365 days/inventory turnover

34
Q

Age of accounts receivable

A

Measures the average time required to collect receivables
- Calculation: 365 days/accounts receivable turnover

35
Q

Accounts receivable turnover

A

Measures how many times per year receivables are collected
-Calculation: net credit sales/average accounts receivable

36
Q

Net Sales

A

Sales - purchase returns and allowances-purchase discounts

37
Q

Accounting Cycle

A

The process involved in journalizing, posting to the ledger, taking a trial balance, preparing statements, making adjusting and closing entries, and preparing a post closing trial balance

38
Q

Accounting Equation

A

Assets equal liabilities plus Owner’s Equity

39
Q

Accounts Payable

A
  • What you owe to creditors
  • An unwritten promise to pay creditors for property, such as merchandise, supplies, or equipment, purchased on credit, or for services received on credit
40
Q

Accounts Receivable

A
  • What customers owe your company
  • An unwritten promise by a customer to pay, at a later date, for goods sold or services tendered
41
Q

Adjusted Trial Balance

A

A trial balance taken after adjusting entries have been recorded

42
Q

Adjusting Entries

A

Entries made at the conclusion of a fiscal period to bring accounts up to date

43
Q

Assets

A

Property of monetary value owned by a business
Assets= liabilities + capital
- found on Balance Sheet
- Permanent Account
- + on left

44
Q

Balance Sheet

A

A formal financial statement illustrating the assets, liabilities, and owner’s equity of a business up to a specific date
Assets= liabilities + owner’s equity
- Remember: UP TO A SPECIFIC DATE

45
Q

Capital (Net worth, owners equity)

A

The amount by which the total assets exceed the total liabilities of a business; an owner’s financial interest in a business
- Found of Balance Sheet & Statement of Owner’s Equity
- + on right

46
Q

Cash

A

Coins, currency (paper money), checks, credit card receipts and money orders received from others, as well as money deposited in the bank

47
Q

Chart of Accounts

A

A LIST of all the account titles and the account numbers assigned to them

48
Q

Closing Entries

A
  • Zero out temporary accounts for the next accounting period
    Entries made at the end of each reporting period to transfer the balances of the temporary owner’s equity accounts to the permanent owner’s equity account and to reduce the balance in the temporary owner’s equity accounts to ZERO in preparation for the next accounting period
49
Q

Contra Account

A

An account designed to accumulate totals to offset a related account

50
Q

Credit

A

The right side of a standard account

51
Q

Debit

A

The left side of a standard account

52
Q

Depreciation

A

The loss of value of a fixed asset due to wear and tear and the passage of time

53
Q

Depreciation Expense

A

the cost of an asset that has been depreciated for a single period, and shows how much of the asset’s value has been used up in that year.

That portion of the original cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from its use

54
Q

Double Entry Accounting

A

The process of recording dual debits and credits for a single business transaction

55
Q

Drawing Account

A

A separate owners equity account in which withdraws of cash or other assets by the owner for personal use are recorded
- Found on Statement of Owner’s Equity
- Temporary Account
- + on left

56
Q

Expenses

A

A decrease in assets to produce revenues
- Found on Income Statement
- Temporary Account
- + on left

57
Q

General Journal

A

A BOOK OF ORIGINAL ENTRY in which to any business transactions is recorded in chronological order

58
Q

General Ledger

A

The book of accounts

59
Q

Income Statement

A

A formal financial statement which presents the income expenses in resulting net profit or net loss for a given period

Revenue-expenses=income statement

60
Q

Liabilities

A

Any debts that a business owes
- Found on Balance Sheet
- Permanent Account
- + on right

61
Q

Permanent Accounts

A

Assets
Liabilities
Capital
- Accounts that accumulate information across accounting periods
- All accounts reported on the balance sheet

62
Q

Revenue (Income)

A

An inflow of assets as a result of selling a product or providing a service
- found on Income Statement
- + on right

63
Q

Statement of Owner’s Equity (statement of net worth)

A

A formal financial statement which summarizes all of the changes in owners equity during a specified period of time

64
Q

T Account

A

A skeleton form of an account used for instructional purposes

65
Q

Temporary owners equity accounts

A

Drawing
Revenue
Expenses
- Accounts utilized to accumulated income expenses and owners withdrawals for one accounting period only

66
Q

Trial balance🟰

A

Making sure debits equal credits on the ledger
- A Work Paper approving the equity of the debit and credit balances in the ledger

67
Q

Which accounts have a + on the left

A

D.A.E
Drawing
Assets
Expenses

68
Q

Which accounts have a + on the right

A

C.R.L
Capital
Revenue
Liabilities

69
Q

Cost of goods sold

A

Beginning inventory + net purchases-ending inventory

70
Q

Cost of goods available for sale

A

Beginning inventory + net purchases

Accounting (3 decks)

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