Glossary terms for the accounting comprehensive final
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| Account | a device for recording the changes in the fundamental acounting elements
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| Account Balance | the difference betweeen the total debits and the total credits in an account
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| Accountant | one who is concerned with the desing of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports
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| Accounting | a language of business employed to communicate financial information based upon analysing, recording, classification, summarization, reporting, and interpretation of finacial data
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| Accounting Cycle | 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, which is repeated each fiscal period
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| Accounting Equation | Assets = Liabilities + Owner's Equity
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| Account Payable | an unwritten promise to pay creditors for property such as merchandise, supplies or equipment purchased on credit, or for services recieved on credit
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| Account Receivable | an unwritten promise by a customer to pay at a later date for goods sold or services rendered
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| AccountsReceivable Turnover | measures how many times per year receivables are collected
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| Calculation for Accounts Receivable Turnover | net credit sales devided by Average Accounts Receivagble
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| Accrual Accounting | recording in each fiscal period applicable expenses, whether paid or not, and income earned
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| Accrued Expense | an expense incurred in operatinga business during an accounting period but not yet paid
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| Accrued Income | income actually earned during an accounting period but which will not be received until a future period
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| Acid Test Ratio/Quick Ratio | quick assets divided by current liabilities
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| Activity Anaysis | measures how efficiently a firm is utilizing its assets
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| Adjused Trial Balance | a trial balance taken after adjusting entries have been recorded
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| Adjusting Entries | entries made at the conclusion of a fiscal period to bring accounts up to date
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| Age of Accounts Receivable | measures the average time requiered to collect recievables (365 days divided by Accounts receivable Turnover)
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| Age of Inventory | measures the average time required to sell inventory (365 days divided by Inventory Turnover)
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| Allowance for Doubtful Accounts (allowance for Bad Debts) | a contra acount utilized to accumulate totals against accounts receivable
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| Analyzing | detemining the fundamental significance of business transactions to that finacial information may be properly processed
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| Assets | property of monetary value owned by a business
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| Bad Debts Expense | accounts receivable that are uncollectible
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| Balance Sheet | a formal finacial statement illustrating the assets, liabilities, and owner's equity of a business as of a specific date
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| Bank Draft | a check drawn by one bak on another bank in which it has funds on deposit
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| Bank Statement Reonciliation | th eprocess by which the depositer verifies agreement between his chebook balance and the bank statement balance
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| Bank Statement | an itemized listing prepared by the bank of additions to and sbutractions from a depositor's account
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| Cancelled Check | a check that has been paid by the ank and returned to the dawer for recordkeeping
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| Capital | the amount by which the total assets exceed the total liabilities of a business
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| Cash | coins, currency, checks
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| Cash Discounts | discounts from quoted pricesas an inducement for promt payment of invoices
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| Cash Payments Journal | a book of original entry in which only cash disbursements are recorded
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| Cash Receipts Journal | a book of original entries in which only cash receipts are recorded
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| Cashires Check | a check drawn by a bank on its own funds and signed by an officer of the bank
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| Certified Check | a check that carries the quarantee of the bank that sufficient funds are avaliable to pay the check when it is presented
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| a list of all the acount titles and the account numbers assinged to them
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| Check | a piece of commercial paper drawn on funds in a bank account and payable on demand
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| Chect stub | a form on which information is recorded by the drawer of a check concerning the check drawn
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| Chronological | in accounting, to record in order of time
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| Classifing | the sorting of the many business transactions in a norderly and systematic manner
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| Closing Entries | entries made at the end of each reporting period to transfer the balances of the temporary owner's equity accounts to the permanent ower's equity account
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| Combination Journal | a book of original enry which combines into one journal the features of the two-column general journal and a special journal
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| Compound Journal Entry | an accounting entry that involves more than two accounts
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| Contra Account | an account desgned to accumulate totals to offset a realated account
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| Credit (Cr) |
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| Credit Balance | a condidion that occurs when the total of the credits in an account is larger than the total of he debits in that account
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| Credit Memorandum | a source doucment that granst credit to a buyer for purchase return or purchase allowance
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| Creditor | a business or individual to whom a debt is owed
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| Cross Referencing | a process of entering the journal page number in the ledger and the ledger account number in the journal
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| Current Assets | cash or other assets that will be converted into cash or consumed within one year
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| Current Asset Ratio | current assets divided by current liabiliies
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| Current Liabilities | debts of a business that are gerally paid within one year
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| Current Ratio | Current assets divided by current liabilities
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| Debit (Dr) | the left side of a standard acount
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| Debit balance | a condition that occurs when the total of the debits in an account is larger than the total of the credits in that account
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| Debit Memorandum | items the bank deducts from the account balance
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| Debtor | the business or individual who owes debt
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| Deposits in Transi | deposits that have been made and aded to depositor's checkbook, but which have not yet been listed on the bank statement
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| Deposit Ticket/Slip | a bank for m which lists thos cash items and individual checks to be deposited
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| Deprecation | th eloss in value of a fixed asset due to wear and tear and the passage of time
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| Depreication Expense | that protion of the original cost of a fixed asset that is assinged as an expense to the reporting perid expercted to benefit from its use
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| Disbursement | a payment
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| Discount Period | a apecific number of days during which a discount is available if the account is paid
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| Dishonored Check | a check not paid by the bank when prperly presented
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| Double Entry Accounting | a process of recording equal debits and credits for a single business transaction
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| Drawee | a person or concern, usually a bank, that has been ordered to make a payment of a check or draft
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| Drawer | a person (depositor) who sings a check, ordering a payment to be made
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| Drawing account | a separate owner's equity account in which withdrawals of cash or other assets by the owener for personal use are recorded
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| Employee | one who is under the control and direction of an employer with regard to the performance of employment
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| Endorsement | th esignature of the payee or other holder placed on the back of a check or other negotiable instrument
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| Endorser | a person or company whose name is written on the back of a cheak
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| Expense | a drecrease in assets, other than withdrawas by the woner, which result from efforts to produce revenues
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| Face of Note | the principal sum the maker of a note promises to pay
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| Federal Income Tax Withholding | the amount that an employer must witholdfrom an employee's pay for income tax purposes
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| Federal Insurance Contributions Act | a federal act wich requires most employers and emploees to pay taxes to support the Federal Social security program
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| Federal Unemployment Tax Act | a federal act imposed upon each employer for the purpose of financing the administratin costs of the federal and the state unemployment compensation programs
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| F.I.C.A. | Federal Unemployment Tax Act
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| Genral journal | a book of original entry in which business transactions are recorded in chronological order
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| General Ledger | the book of accounts
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| Gross Earnings/Gross Pay | income before any deductions have been made
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| Gross Profit/Gross Margin | net sales minus the cost of goods sold
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| Gross PRofit Percentage | gross profit divided by net sales
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| IN Balance | a condition in which the total of the debits and the total of the credits are equal in an account
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| Income/Revenue | an inflow of assets as a result of selling a prodct or provding a servie
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| INcome Statement Commmon-Size Statements/Percentage Method | express the major items in th eINcome Statemnt as a precent of Net Sales and compare with previous fiscal periods
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| Income Statement Comparative Forms | record the income statement data for two or more Comparable periods of the same form so that the infomration can be readily compared
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| Income Statement | a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period
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| Income Tax | a tax levied on the earnings of individuals and businesses by federal, state, and local governments
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| Independent Contractor | any person who agrees to perfomr a service for a fee and who is not subject to the ocntrol of those for whom th e service is perfomred
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| Information Processor | "bookkeeper"
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| Intangible assets | those assets that cannot be touched or grasped
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| Interest | money paid for the use of money
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| Inerpreting | explaining th esignificant events or developments that occur, usually taking the form a analysis and comparisons
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| Inventory Turnover | the number of times the avera inventory has been sold or used up during a period
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| Invoice | a source document showing quantity, description, prices of items, total amount of purchase and the terms of payment
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| Journalizing | the process of recording business transactions in a journal
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| Ledger | a book of accounts
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| Liabilities | any debts that a business owes
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| Liquidity Analysis |
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| Long-Term Assets | Fixed assets
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| Maker | an individual who promises to pay on a promissory not
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| Maturity date | the date on which payment is due on a promissary note
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| Merchandise | goods purchased for resale at a profit
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| Mortgage Payable | a long-term liability; written prmoise that pledges rea property as security for payment of a debt
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| N.S.F. | Not sufficient funds
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| Net income | the difference between gross profit and expenses when gross profit is larger
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| Net loss | the difference between gross profit and expenses when expenses are larger
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| Net pay | gross pay less paroll deductions
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| Net purchases | purchases minus purchse returns and allowances minus purchase discounts
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| Net sales | sales minus sales returns and allowances minus discount
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| Net worth | capital
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| Not payable | a written promise to pay a creditor a certain amount in the future
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| Note receivable | a written prmise of a cusomter to pay the business a sum of mone at a future date
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| Operateing Expenses | expenses in curred in the nomral operation of a business
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| Operating Staement | Income statement
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| Original cost basis | the amount originally paid for a depreciable asset
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| Other Expenses | expenses incureed that are not the direct result of regular trading activities of a business
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| Other Income | income recieved that is not the direct result of reqular trading activities of a business
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| Outstanding Checks | checks that have been drawn and subtracted from the depositor's checkbook but which have not yet been presented to the bank for payment
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| over draft | the issuance of a check without sufficient funds in the account when it is presented for payment
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| Owner's Equity | the amount by which the total assets exceed the total liabilities of a busness
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| Payee | a person or comapny who will receive payment on a promissary note, check, draft or money order
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| Petty Cash Fund | a fund of currency and coin established for the payment of small amounts of money
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| Petty Cash voucher | a form used to reflect payments from the petty cash fund
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| Post-closing Trial Balance | a work paper prepared after all the woner's temporary equity accounts have been closed and all permanent accounts have been baanced and ruled proving the equality of the debits and credits
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| Postdated Check | a check dated subsequent to its dae of issuance
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| Posting | thransferal of data from the journal to the ledger
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| Prepaid Expenses | items that are soncidered to be assets when acquired, but which will become expenses when sonsumed or expired
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| Pricipal | the face value of a promissory note upon which interest is computed
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| Profit Margin | net income divided by net sales
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| Profitability Analysis | provides evidence concerning the earnings potential of a company and how effectively the firm is being managed
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| Promissory note | written order by a buyer for erchandise or other property sepcified in the purshase requisition
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| Proving the Journal | a process wich examines each page of a journal, confirming that the debit entries equal the credit entries on each page
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| Proving Cash | the process of detemining wheterh the amount of cahs, both on hand and in the bank, is the same as the which is indicated in the accounting records
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| Purchase Invoice | a source document prepared by the seller lising the items shipped, their cost and the method of shipment
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| Purchase Order | a written order by a buyer for mercandise or other property specified in the purchase reuisition
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| Purchase Requisition | a form used to request the responsible person or department to purchase merchandise or other property
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| Purchases | a temporary owner's equity account used to record the buying of merchandise for resale
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| Purchases Discount | a temporary owner's equity conra acount used to record diiscounts taken on inventory purchases; the amount of any disounts granted by suppliers to enourage prompt payment of their invoices
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| Purchases journal | a book of original entry used to record purchases of merchandise on credit only
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| Purchases Returns and allowances | a temporary owner's equity contra account utilized to record the return of merchandise to the manufactuere or supplier as the resuld of material defects in workamanship and/or inferior product quality
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| Quarterly | a three-month period
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| Quick Assets | cash, marketable securities, accounts, and notes receivable
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| Rate | the annual precentage rate used to compute interes
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| Recording | the committing of business transaction and the events surrounding such into wrigin
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| Resricitve ednorsement | an enorsement that limits the use of unds to the purpose stated
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| Retail Sales Tax | a tax imposed on tanigible personal property sold at retail
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| Salary | genrally considered to be compensation formanagerial or admisistrative services, experessed in terms of a month or yhear
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| Sales | a temporary owner's equity account used to record the earning of revenue
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| Sales discount | temporary owner's equit contra account uded to record dicounts given to customers as an incentive for promt payment
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| Sale Invoice | a source document prepared by the seller that lists the itmes shipped thei rcost and the meothod of shipment
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| a book of original entry used for the recordin of sales of merchandise on credit only
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| Sales Returns and Alowances | a temporary equity conra account used to record credit given to a customer for shortages or damaged goods
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| Alvage Value | extimated value of a fixed asset at the endo fits useful life
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| Source Document | first record of a business transaction
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| Special Journal | a special journal designed to accumulate data about only one kind of business trasaction
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| Staement of account | a report sent to each customer, usually at the end of themonth, which indicates th s
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| Statement of Financial Condition | Balance sheet
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| Statement of Owner's Equity | a formal financial statement which summarizes all of the changes in owner's equity during a specified period of time
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| Straight Line depriciation | method in which the depreiciable cost basis of an asset is apportioned equally over its estimated useful life expressed in terms of months or years
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| Stop Payment Order | an order by a depositor requesting a bank not to pay on a check previously issued
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| Summarizing | bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements
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| Supplies | a type of asset hat will be consumed as it is used
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| T-account | a skeleton form of an account used for instrutional puposed
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| tak home pay | the amount of pay after deductions have been subtracted
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| Tangible assets | those assets hat can be appraised by balue or seen or touched
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| Temporary Owner's Equity Accounts | accounts utilized to accumulate income, expenses and owner's wih rawals for one accounting period only
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| Time/term of NOte | period of itme from the date of the note to thematurity date
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| Transaction Analysis | the effect of transactions on the accounting elements
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| Transaction | any activity of a business enterprise that involves the exchange of values
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| Transposition Error | an amount writen with the diits in incorrect order
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| Rial Balance | a work paper proving the equality of the debit and credit balances in the ledger
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| U.C.F. | Uncollectible Funds
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| Useful Life | estimated life of a fixed asset
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| W-2 Form | wage and tax staement; report furnished by the employer for each employee indicating gross earnings and deuctions fo rincome and F.I.C.A. taxes
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| W-4 Form | employee' Wiholding Allowance Certificate
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| Wage | form of ocmpensatino usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed
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| Worksheet | expanded trial balance utilized for computing, classifying, and sorting account balances before preparing the formal finalncial statements
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