Vocabulary- Accounting for Funeral Service Flashcards
A federal act which requires most employers and employees to pay taxes to support the federal social security program.
Federal Insurance Contributions Act
Property of a relatively permanent nature used in the operation of a business and not intended for resale.
Fixed Assets (Long Term Assets)
Net income divided by net sales.
Profit Margin
A source document showing quantity, description, prices of items, total amount of purchase and the terms of payment.
Invoice
A journal designed to accumulate data about only one kind of business transaction.
Special Journal
Property of monetary value owned by a business.
Assets
The right side of a standard account.
Credit
A total, written in small pencil figures, under the last entry in a column of an account.
Footing (Pencil Footing)
A temporary owner’s equity contra account utilized to record the return of merchandise to the manufacturer or supplier as the result of material defects in workmanship and/or inferior product quality.
Purchases Returns and Allowances
A formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period.
Income Statement
Profit and Loss Statement, Statement of Operations, Operating Statement
A temporary owner’s equity contra account used to record discounts taken on inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices.
Purchases Discount
Accounts utilized to accumulate income, expenses, and owner’s withdrawals for one account period only.
Temporary Owner’s Equity Accounts
A special ledger account which is used to keep track of unexplained shortages or overages of cash.
Cash Short and Over
A condition in which the total of the debits and the total of the credits are equal in an account.
In Balance
A twelve month period beginning January 1st and concluding on December 31st.
Calendar Year
Any activity of a business enterprise that involves the exchange of values.
Transaction
A business or individual to whom a debt is owed.
Creditor
A source document that grants credit to a buyer for purchase return or purchase allowance.
Credit Memorandum
Gross profit divided by net sales.
Gross Profit Percentage
Cash or other assets that will be converted into cash or consumed within one year.
Current Assets
A tax levied on the earnings of individuals and businesses by federal, state, and local governments.
Income Tax
Income before any deductions have been made.
Gross Earnings (Gross Pay)
A check dated subsequent to (following) its date of issuance.
Postdated Check
A check drawn by a bank on its own funds and signed by an officer of the bank.
Cashiers Check
An expense incurred in operating a business during an accounting period, but not yet paid.
Accrued Expense
An accounting practice in which revenue is not recognized in the accounting records until received and which expenses are not recognized until paid.
Cash Basis Accounting
A process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page.
Proving the Journal
Measures the ability of the form to meet its current obligations.
Liquidity Analysis
A person of concern, usually a bank, that has been ordered to make a payment on a check or draft.
Drawee
A form used to reflect payments from the petty cash fund.
Petty Cash Voucher
The process of entering the journal page number in the ledger and the ledger account number in the journal.
Cross Referencing
The face value of a promissory note upon which interest is computed.
Principal
The difference between to total debits and total credits in an account.
Account Balance
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.
Closing Entries
Employee’s Withholding Allowance Certificate
W-4 Form
The process of communicating the results achieved during an accounting period to others.
Final Processing (Reporting)
A temporary owner’s equity account used to record the buying of merchandise for resale.
Purchases
A language of business employed the communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data.
Accounting
Not Sufficient Funds
NSF
Liabilities that are not due and payable within one year.
Fixed Liabilities (Long Term Liabilities)
Provides evidence concerning the earnings potential of a company and how effectively the firm is being managed.
Profitability Analysis
Recording in each fiscal period applicable expenses, whether paid or not, an income earned, whether collected or not.
Accrual Accounting
Measures how efficiently a firm is utilizing its assets.
Activity Analysis
A work paper prepared after all temporary owner’s equity accounts have been closed and all permanent accounts have been balanced and ruled, proving the equality of the debits and credits.
Post Closing Trial Balance
A work paper proving the equality of the debit and credit balance in the ledger.
Trial Balance
Funeral Unemployment Tax Act.
FUTA
A report sent to each customer, usually at the end of the month, which indicates the status of their account.
Statement of Account
A method of computing interest based on the assumption that there are 360 days in a year.
Banker’s Method (360 Day Method)
A written promise of a customer to pay the business a sum of money at a future date.
Note Receivable
A formal financial statement illustrating the assets, liabilities, and owner’s equity of a business as of a specific date.
Balance Sheets
(Statement of Financial Position, Statement of Financial Condition)
A book or original entry in which only cash receipts are recorded.
Cash Receipts Journal
A piece of commercial paper drawn on funds in a bank account and payable on demand.
Check
Determining the fundamental significance of business transactions so that financial information may be properly processed.
Analyzing
A person or company who will receive payment on a promissory note, check, draft, or money order.
Payee
An individual who promises to pay on a promissory note; an individual who signs a promissory note.
Maker
A book of original entry used to record purchases or merchandise on credit only.
Purchases Journal
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.
Independent Contractor
Cash, marketable securities, accounts and notes receivable.
Quick Assets
An unwritten promise to pay creditors for property, such as merchandise, supplies or equipment, purchased on credit, or for services received on credit.
Account Payable
Sales minus sales returns and allowances minus sales discounts.
Net Sales
An unwritten promise by a customer to pay, at a later date, for goods sold or services rendered.
Account Receivable
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.
Depreciation Expense
Discounts from quoted prices as an inducement for prompt payment of invoices.
Cash Discounts
A written promise to pay a creditor a certain amount in the future.
Note Payable
A decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenues.
Expense
The business or individual who owes a debt.
Debtor
A check which has ben paid by the bank and returned to the drawer for record keeping.
Canceled Check
A check not paid by the bank when properly presented.
Dishonored Check
A payment.
Disbursement
An individual possessing a college education, having practical experience in accounting and who has passed a comprehensive state examination in order to be certified to practice public accounting in that state.
Certified Public Accountant (CPA)
A device for recording the changes (increases or decreases) in the fundamental accounting elements.
Account
The process by which the depositor attempts to reconcile the bank statement balance with the checkbook balance.
Bank Statement Reconciliation
The process of recording equal debits and credits for a single business transaction.
Double Entry Accounting (Double Entry Bookkeeping)
The cost of a fixed asset less its accumulated depreciation.
Book Value (Undepreciated Cost)
Entries made at the conclusion of a fiscal period to bring accounts up to date.
Adjusting Entries
One who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports.
Accountant
A written order by a buyer for merchandise or other property specified in the purchase requisition.
Purchase Order
The recording of financial information in a prescribed manner.
Bookkeeping
A specific number of days during which a discount is available if the account is paid.
Discount Period
Net sales minus the cost of goods sold.
Gross Profit (Gross Margin)
Gross pay less payroll deductions; an employee’s take home pay.
Net Pay (Net Earnings)
A federal act imposed upon each employer for the purpose of financing the administration costs of the federal and state unemployment compensation programs.
Federal Unemployment Tax Act
The process of determining whether the amount of cash, both on hand and in the bank, is the same as that which is indicated in the accounting records.
Proving Cash
A book of original entry in which business transactions are recorded in chronological order.
General Journal (Journal)
A separate owner’s equity account in which withdrawals of cash or other assets by the owner for personal use are recorded.
Drawing Account (Owner Withdrawals)
A book of original entry which combines into one journal the features of the two column general journal and a special journal.
Combination Journal
Quick assets divided by current liabilities.
Acid Test Ratio (Quick Ratio)
A trial balance taken after adjusting entries have been recorded.
Adjusted Trial Balance
In accounting, to record in order of time.
Chronological
Bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements.
Summarizing
Expenses incurred that are not the direct result of regular trading activities of a business.
Other Expenses
The amount of pay after deductions (income taxes, FICA taxes, etc.) have been subtracted.
Take Home Pay/ Net Pay
A type of asset that will be consumed as it is used. (Examples: embalming supplies and office supplies).
Supplies
A period of time covered by an income statement.
Fiscal Period
An endorsement which limits the use of funds to the purpose stated (Example: “For deposit only.”)
Restrictive Endorsement
A source document prepared by the seller listing the items shipped, their cost and the method of shipment (the the buyer’s viewpoint).
Purchase Invoice
Accounts receivable that are uncollectible.
Bad Debts Expense
Bad Debts Collectible Accounts Expense, Loss from Uncollectible Accounts
The transferal of data from the journal to the ledger.
Posting
A form used to request the responsible person or department to purchase merchandise or other property.
Purchase Requisition
Generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year.
Salary
The loss in value of a fixed asset due to wear and tear and the passage of time; or, a method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life.
Depreciation
Debts of a business that are generally paid within one year.
Current Liabilities
A temporary owner’s equity contra account used to record credit given to a customer for shortages or damaged goods.
Sales Returns and Allowances
A method in which the depreciable costs basis (original cost basis less salvage value) of an asset that is apportioned equally over its estimated useful life expressed in terms of months or years.
Straight Line Depreciation
Measures how many times per year receivables are collected.
Calculation: net credit sales divided by average accounts receivable. Average accounts receivable= (beginning accounts receivable + ending accounts receivable) divided by 2.
Accounts Receivable Turnover
The sorting of the many business transactions in an orderly and systematic manner.
Classifying
Abbreviation for Federal Insurance Contributions Act.
FICA
A skeleton form of an account used for instructional purposes.
T Account
State Unemployment Tax Act.
SUTA
Measures the average time required to collect receivables.
Calculation: 360 days divided by Accounts Receivable Turnover
Age of Accounts Receivable
Money and money substitutes paid.
Cash Payments (Cash Disbursements)
The difference between gross profit and expenses when gross profit is larger.
Net Income (Net Profit)
A condition that occurs when the total of the credits in an account is larger than the total of the debits in that account.
Credit Balance
Those assets that cannot be touched or grasped (examples include patents, copyrights and goodwill).
Intangible Assets
The amount that an employer must withhold from an employee’s pay for income tax purposes.
Federal Income Tax Withholding
The signature of the payee of other holder placed on the back of a check or other negotiable instrument.
Endorsement (Indorsement)
The issuance of a check without sufficient funds in the account when it is presented for payment.
Overdraft
Those assets that can be appraised by value or seen or touched.
Tangible Assets
A condition which occurs when the total of the debits in an account is larger than the total of the credits in that account.
Debit Balance
A check drawn by one back on another bank in which it has funds on deposit.
Bank Draft
A formal written statement, which may be based upon adjusted historical data, of management’s plans for the future expressed in financial terms.
Budget
Income actually earned during an accounting period but which will not be received until a future period.
Accrued Income
The effect of transactions on the accounting elements.
Transaction Analysis
The period of time from the date of the note to the maturity date.
Time of Note (Term of Note)
A temporary owner’s equity contra account used to record discounts given to customers as an incentive for prompt payment.
Sales Discount
Assets equal liabilities plus Owner’s Equity.
Accounting Equation
An amount written with the digits in incorrect order.
Transposition Error
Items which are considered to be assets when acquired, but which will become expenses when consumed or expired.
Prepaid Expenses
A list of all the account titles and the account numbers assigned to them
Chart of Accounts
Deposits that have been made and added to the depositor’s checkbook, but which have not yet been listed on the bank statement.
Deposits in Transit
Money paid for the use of money.
Interest
Checks that have been drawn and subtracted from the depositor’s checkbook, but which have not yet been presented to the bank for payment.
Outstanding Checks
A fund of currency and coin established for the payment of small amounts of money.
Petty Cash Fund
The difference between gross profit and expenses when expenses are larger.
Net Loss
The book of accounts.
General Ledger (Ledger)
A source document prepared by the seller that lists the items shipped, their cost and the method of shipment (from the seller’s viewpoint)
Sales Invoice
A person (depositor) who signs a check, ordering a payment to be made.
Drawer
The handwritten signature of the payee on the back of the check.
Blank Endorsement
Those goods or stock of goods which are held for resale at a profit.
Inventory (Merchandise)
Purchases minus purchase returns and allowances minus purchase discounts.
Net Purchases
One who is under the control and direction of an employer with regard to the performance of employment.
Employee
A form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed.
Wage
The date on which the payment is due on the promissory note.
Maturity Date
An expanded trial balance utilized for computing, classifying, and sorting account balances before preparing the formal financial statements.
Worksheet
A check which carries the guarantee of the bank that sufficient funds are available to pay the check when it is presented.
Certified Check
A contra account utilized to accumulate totals against accounts receivable.
Allowance for Doubtful Accounts (Allowance for Bad Debts)
The first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.
Source Document (Business Paper)
A three-month period.
Quarterly
Coins, currency (paper money), checks, credit card receipts and money orders received from others, as well as money deposited in the bank.
Cash
Any debts that a business owes.
Liabilities
One who is involved in the process of recording financial information in a prescribed manner.
Bookkeeper (Information Processor)
Current assets divided by current liabilities.
Current Asset Ratio
A person or company whose name is written on the back of a check.
Endorser
An order by a depositor requesting a bank not to pay on a check previously issued.
Stop Payment Order
The process of recording business transactions in a journal.
Journalizing
The process involved in journalizing, posting to the ledger, taking a trail balance, preparing statements, making adjusting and closing entries, and preparing a post-closing trial balance, which is repeated each fiscal period.
Accounting Cycle
Explaining the significant events or developments that occur, usually taking the form of analysis and comparisons.
Interpreting
Income received that is not the direct result of regular trading activities of a business.
Other Income
The amount by which the total assets exceed the total liabilities of a business; an owner’s financial interest in a business.
Owner’s Equity (Net Worth, Capital, Proprietorship)
An itemized listing prepared by the bank of additions to the subtractions from a depositor’s account.
Bank Statement
End of Month.
EOM
The annual percentage rate used to compute interest.
Rate
A written promise made by a person or business to pay a certain sum of money to another person or business at a specified time in the future.
Promissory Note
A formal financial statement which summarizes all of the changes in owner’s equity during a specified period of time.
Statement of Owner’s Equity (Statement of Net Worth)
The left side of a standard account.
Debit
An accounting entry that involves more than two accounts.
Compound Journal Entry
The abbreviation of credit.
CR.
A form on which information is recorded by the drawer of a check concerning the check drawn; a source document.
Check Stub
The estimated determinable life of a fixed asset.
Useful Life
An inflow of assets as a result of selling a product or providing a service.
Income (Revenue)
A temporary owner’s equity account used to record the earning of revenue.
Sales
A report furnished by the employer for each employee indicating the gross earnings and deductions for income and FICA taxes.
W-2 Form (Wage and Tax Statement)
The committing of a business transaction and the events surrounding such into writing.
Recording (Data Entry)
An account designed to accumulate totals to offset a related account.
Contra Account
A book or original entry used for the recording of sales of merchandise on credit only.
Sales Journal
The principal sum of the maker of a note promises to pay.
Face of Note
The number of times the average inventory has been sold or used up (turned over) during a period.
Calculation:
365 divided by (cost of goods sold for period divided by average inventory).
Average inventory = (beginning inventory +ending inventory) divided by 2.
Inventory Turnover
A tax imposed on tangible person property sold at retail.
Retail Sales Tax
A long term liability; a written promise that pledges real property as security for payment of a debt.
Mortgage Payable
A bank form which lists those cash items (currency and coin) and individual checks to be deposited.
Deposit Ticket (Deposit Slip)
