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Worsham

Accounting Q1 terms

TermDefinition
Account a device for recording the changes (increases or decreases) in the fundamental accounting elements.
Accountant one who is concerned with the design of the system of records, the preparation of the reports based upon the recorded data, and the interpretation of the reports.
Accounting a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data
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.
Accounting equation assets equal Liabilities plus Owner's Equity
Accounts payable an unwritten promise by a creditors for property, such as merchandise, supplies, or equipment, purchased on credit, or for services received on credit
Accounts receivable an unwritten promise by a customer to pay, at a later date, for goods sold or services rendered
Accrual accounting recording in each fiscal period applicable expenses, whether paid or not, and income earned, whether collected or not
Adjusted trial balance a trial balance taken after adjusting entries have been recorded
Adjusting entries entries made at the conclusion of a fiscal period to bring accounts up to date
Assets Property of monetary value owned by a business
Balance sheet a formal financial statement illustrating the assets, liabilities, and owner's equity of a business as of a specific date
Bookkeeper one who is involved in the process of recording financial information in a prescribed manner
Bookkeeping the recording of financial information in a prescribed manner
Book value the cost of a fixed asset less its accumulated depreciation
Source documents the 1st record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tape, etc
what are the other names for Capital? net worth, owner's equity, proprietorship
Capital the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business
Cash Coins, currency (paper money), checks, credit cards receipts and money orders received from others, as well as money deposited in the bank
Cash basis accounting an accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid
charts of accounts a list of all account titles and the account numbers assigned to them
Closing entries entries made at the end of each reporting period to transfer tbalances of the temporary owner's equity accounts to permanent owner's equity account and to reduce the balance in the temporary owner's equity accounts to 0 in preparation for the next account
Compound journal entry an accounting entry that involves more that two accounts
Contra account (little brother) An account designed to accumulate to accumulate totals to offset a related account
Credit the right side of a standard account
Credit balance a condition that occurs when the total of the credits in an account is larger than the total of the debits in that account
Debit the left side of a standard account
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
Depreciation 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 it useful life
Depreciation expense that portion of the original cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from it use
Double entry accounting (bookkeeping) the process of recording equal debits and credits for a single business transaction
Drawing account a separate owner's equity account in which withdrawals of cash or other assets by the owner for personal use are recorded
Expenses a decrease in assets, other than withdrawals by the owner, which results from efforts to produce revenues
General Journal a book of original entry in which any business transactions is recorded in chronological order
Income (revenue) an inflow of assets as a result of selling a product or providing a service
what is Income statement referred to? profit and loss statement; statement of operations: operating statement
Income statement a formal financial statement which present the income, expenses, and resulting net profit or net loss for a given period
Journal any book of original entry
Ledger a book of accounts in which data from transactions recorded in journals are posted and thereby summarized
Liabilities any debts that a business owes
Net income (net profit) the difference between gross profit and expenses when the gross profit is larger
Net los the difference between gross profit and expense when expenses are larger
Original cost basis The amount original paid for a depreciable asset
Permanent accounts accounts that accumulate information across accounting period; all accounts reported on the balance sheet (DON'T CLOSE)
what are the permanent accounts? assets, liabilities, capital
Post-closing balance 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 debit and credits (LAST STEP IN ACCOUNTING CYCLE)
Posting the transferal of data from the journal to the ledger
Prepaid expense Items which are considered to be assets when acquired, but which will become expenses when consumed or expired
Salvage value the estimated value of a fixed asset at the end of it useful life
Statement of net worth or statement of owner's equity a formal financial statements which summarizes all of the changes in owner's equity during a specified period of time
Straight-line depreciation a method in which the depreciable cost basis (original cost basis less salvage value) of an asset is apportioned equally over its estimated useful life expressed in terms of month or years.
Supplies a type of asset that will be consumed as it used EX: embalming fluids
T accounts a skeleton form of an account used for instructional purposes
Temporary accounts accounts utilized to accumulated income, expenses and owner's withdrawals for one accounting period only.(CLOSE)
What are the temporary accounts? revenue, expense, income summary, drawing
Transaction any activity of a business enterprise that involves the exchange of values
Trial Balance a work paper proving the equality of the debit and credit balances in the ledger
Useful life the estimated determinable life of a fixed asset