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FBLA Accounting I
Accounting I terms and definitions to know to prepare for FBLA
| Term | Definition |
|---|---|
| Return on investment | The ration of the money earned on an investment |
| Real property | Land and anything attached to land |
| Personal property | All property not classified as real property |
| Assessed Value | The value of an asset determined by tax authorities for the purpose of calculating taxes. |
| Plant asset record | an accounting form on which a business records information about each plant asset |
| Gain | An increase in equity resulting from activity other than selling goods or services |
| Gain on plant assets | An increase in equity that results when a plant asset is sold for more than book value |
| Loss | A decrease in equity resulting from activity other than selling goods or services |
| Loss on plant assets | A decrease in equity that results when a plant asset is sold for less than book value |
| Accelerated depreciation | Any method of depreciation which records greater depreciation expense in the early years and less depreciation expense in the later years |
| Declining-balance method of depreciation | A type of accelerated depreciation that multiplies the book value of an asset by a constant depreciation rate to determine annual depreciation. |
| Double-declining balance method of depreciation | A declining-balance rate that is two times the straight-line rate. |
| Intangible Asset | An asset that does not have physical substance. |
| Amortization | The spreading of the cost of an intangible asset over its useful life. |
| Payroll | list of a business's employees and the payment due to each employee for a specific pay period |
| Pay period | amount of time for which an employee is paid |
| Payroll clerk | a person who is responsible for preparing the payroll |
| Gross earnings | total amount of money earned by an employee in a pay period |
| Salary | fixed amount of money paid to an employee for each pay period |
| wage | amount of money paid to an employee at a specified rate per hour worked |
| time card | record of the time an employee arrives at work each time, the time the employee leaves, and the total number of hours worked each day |
| electronic badge readers | computer technology where each employee's time card has a magnetic strip on which is encoded certain employee information |
| piece rate | amount paid for each piece produced in a factory or manufacturing plant |
| commission | amount paid to an employee based on a percentage of the employee's salary |
| overtime rate | set by the Fair Labor Standards Act, is 1 and 1/2 times the employee's regular rate |
| deduction | the amount that is subtracted from gross earnings |
| exemption | an allowance claimed by a tax-person that reduces the amount of taxes that must be paid |
| payroll register | form that summarizes information about an employees' earnings for each pay period |
| net pay | amount of money left after all deductions are subtracted from gross earnings |
| direct deposit | the employee's net pay is deposited in her or his personal bank account |
| employee's earning record | where the individual payroll record for each employee is recorded |
| accumulated earnings | each employee's year to date gross earnings |
| unemployment taxes | based on a percentage of their employees' gross earnings and are collected to provide funds for workers who are temporarily out of work |
| federal tax deposit coupon | (Form 8109) prepared and sent with the check to show the amount of taxes being sent to the federal government |
| form 941 | the employer's quarterly federal tax return |
| form w-2 | summarizes an employee's earnings and tax deductions for the previous calendar year |
| form w-3 | summarizes the information contained on the employee's form w-2 |
| form 940 | an employer's annual unemployment tax return |
| internal controls | those steps the business takes to protect cash and other assets |
| external controls | those controls provided outside the business (ex. verifying the accuracy of a signature) |
| checking account | a bank account that allows a bank customer to deposit cash and to write checks against the account balance |
| check | a written order from a depositor telling the bank to pay a stated amount of cash to the person or business named on the check |
| depositor | person or business that has cash on deposit in a bank |
| signature card | contains the signatures of the persons authorized to write checks on the bank account |
| deposit slip | a bank form on which the currency and checks to be deposited are listed (deposit ticket) |
| endorsement | authorized signature that is written or stamped on the back of a check |
| restrictive endorsement | restricts or limits how a check may be handled |
| drawer | the person who signs a check |
| drawee | bank on which the check is written |
| voiding a check | writing the words void in large letters across the top of a check |
| bank statement | itemized record of all the transactions occurring in a depositor's account over a given period, usually a month |
| canceled check | returned checks that are stamped and marked with the word paid and the date of the payment |
| reconciling the bank statement | the process of determining any differences between the balances shown on the bank statement and the checkbook balances |
| outstanding checks | checks that have been written but not deposited |
| outstanding deposits | deposits that have been made and recorded in the checkbook but do not appear on the bank statement |
| bank service charge | fee charged by the bank for maintaining bank records and for processing bank statement items for the depositor |
| stop payment order | demand by the depositor that the bank not honor a certain check |
| NSF check | one returned by the bank because there are not sufficient funds in the drawer's checking account to cover the amount of the check |
| electronic funds transfer system | enables banks to transfer funds from the account of one depositor to the account of another quickly and accurately without the immediate exchange of checks |
| merchandising business | buys goods such as books, clothing or furniture and then sells those goods for profit |
| retailer | business that sells to the final user |
| wholesaler | business that sells to the retailer |
| merchandise | the goods bought for resale to customers |
| inventory | the items of merchandise the business has in stock |
| sale on account | the sale of goods that will be paid for later |
| charge customer | the customer to whom a sale on account is made |
| credit cards | entitles a charge customer to charge merchandise |
| sales slip | form that lists the details of a sale: the date, the name of the customer, and the description, quantity, price |
| sales tax | tax on the retail sale of goods and service |
| credit terms | set out the time allowed for payment (total amount of sale/amount of time) |
| special journals | multi-column journals that have columns reserved for the recording of specific types of transactions |
| sales journal | special journal used to record only the sale of merchandise on account |
| accounts receivable subsidiary ledger | separate ledger that contains accounts for all charge customers |
| subsidiary ledger | ledger, or book, that is summarized in a controlling account in the general ledger |
| controlling account | balance must equal the total of all the account balances in the subsidiary ledger |
| footing | column total written in small pencil figures |
| adjusting entries | Journal entries recorded to update general ledger accounts at the end of a fiscal period. |
| permanent accounts | accounts used to accumulate information from one fiscal period to the next. |
| temporary accounts | Accounts used to accumulate information until it is transferred to the owner's capital account. |
| closing entries | journal entries used to prepare temporary accounts for a new fiscal period. |
| post-closing trial balance | A trial balance prepared after the closing entries are posted |
| accounting cycle | The serious of accounting activities included in recording financial information for a fiscal period |
| stakeholders | individuals or groups who have an interest in and are affected by the actions of an organization |
| component percentage | The percentage relationship between one financial statement item and the total that includes that item. |
| fiscal period | The length of time for which a business summarizes and reports financial information. |
| work sheet | A columnar accounting form used to summarize the general ledger information needed to prepare financial statements |
| trial balance | A proof of the equality of debits and credits in a general ledger. |
| adjustments | Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period. |
| balance sheet | A financial statement that reports assets, liabilities, and owner's equity on a specific date. |
| income statement | A financial statement showing the revenue and expenses for a fiscal period. |
| net income | The difference between total revenue and total expenses when total revenue is greater |
| net loss | The difference between total revenue and total expenses when total expenses are greater. |
| code of conduct | A statement that guides the ethical behavior of a company and its employees. |
| checking account | A bank account from which payments can be ordered by a depositor |
| endorsement | A signature or stamp on the back of a check transferring ownership |
| blank endorsement | An endorsement consisting only of the endorser's signature. |
| special endorsement | An endorsement indicating a new owner of a check. |
| restrictive endorsement | An endorsement restricting further transfer of a check's ownership. |
| postdated check | A check with a future date on it. |
| bank statement | A report of deposits, withdrawals, and bank balance sent to a depositor by a bank |
| dishonored check | A check that a bank refuses to pay. |
| electronic funds transfer | A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents. |
| debit card | A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder. |
| petty cash | An amount of cash kept on hand and used for making small payments |
| petty cash slip | A form showing proof of a petty cash payment. |
| ledger | a group of accounts |
| general ledger | A ledger that contains all accounts needed to prepare financial statements |
| account number | The number assigned to an account. |
| file maintenance | The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current. |
| opening an account | Writing an account title and number on the heading of an account. |
| posting | Transferring information from a journal entry to a ledger account. |
| journal | A form for recording transactions in chronological order |
| journalizing | Recording transactions in a journal. |
| special amount column | A journal amount column headed with an account title |
| general amount column | A journal amount column that is not headed with an account title. |
| entry | Information for each transaction recorded in a journal |
| double-entry accounting | The recording of debit and credit parts of a transaction |
| source document | A business paper from which information is obtained for a journal entry |
| check | a business form ordering a bank to pay cash from a bank account |
| invoice | A form describing the goods or services sold, the quantity, and the price |
| sales invoice | An invoice used as a source document for recording a sale on account |
| receipt | A business form giving written acknowledgement for cash received |
| memorandum | A form on which a brief message is written describing a transaction |
| proving cash | Determining that the amount of cash agrees with the accounting records. |
| T account | An accounting device used to analyze transactions |
| debit | An amount recorded on the left side of a T Account |
| credit | An amount recorded on the right side of a T account |
| normal balance | The side of the account that is increased. |
| chart of accounts (COA) | A list of accounts used by a business |
| accounting | Planning, recording, analyzing, and interpreting financial information. |
| accounting system | A planned process for providing financial information that will be useful to management. |
| accounting records | Organized summaries of a business's financial activities. |
| service business | A business that performs an activity for a fee. |
| proprietorship | A business owned by one person. |
| financial statements | Financial reports that summarize the financial condition and operations of a business. |
| asset | anything of value that is owned |
| equities | Financial rights to the assets of a business. |
| liability | an amount owed by a business |
| owner's equity | The amount remaining after the value of all liabilities is subtracted from the value of all assets. |
| accounting equation | An equation showing the relationship among assets, liabilities, and owner's equity, Assets = Liabilities + Owner's Equity |
| ethics | the principles of right and wrong that guide an individual in making decisions |
| business ethics | the use of ethics in making business decisions. |
| transaction | A business activity that changes assets, liabilities, or owner's equity. |
| account | A record summarizing all the information pertaining to a single item in the accounting equation |
| account title | The name given to an account. |
| account balance | The amount in an account |
| capital | the account used to summarize the owner's equity in a business |
| revenue | an increase in owner's equity resulting from the operation of a business |
| sale on account | A sale for which cash will be received at a later date |
| expense | a decrease in owner's equity resulting from the operation of a business Expense a decrease in owner's equity resulting from the operation of a business |
| withdrawals | Assets taken out of a business for the owner's personal use. |
| assets | economic resources owned by a company that are expected to benefit future business periods. |
| account | balance sheet with assets on the left and owners equity and liabilities on the right is what form |
| FIFO | during inflation _____ gives the highest net income (lowest cost of goods sold and highest merchandise available for sale) |
| LIFO | income statement approach |
| going concern | business will continue on to carry commitments and obligations |
| business entity | personal accounts of owner are separate from business |
| historical costs | original cost of plant asset |
| debit balance | what type of balance on the trial balance does merchandise inventory have at the beginning of a fiscal period on worksheet |
| supplies in the debit column of the trial balance column of the worksheet | amount of supplies available during the period |
| withholdings | wage payroll period marital status and allowances |
| info for employee's FICA | wage year to date earnings FICA rates |
| estimate of useful life is based on | prior experience |
| realization of revenue | revenue earned |
| total employee deductions | fica tax income tax |
| reversing accrued interest expense | interest expense gets credited |
| employee social security | total earnings accumulated earnings social security tax rate and social security tax base |
| objective evidence | accounting entries based on facts |
| conservatism | accounting for a business is fair and reasonable |
| time period | use fiscal periods for accounting |
| cost principle | purchases recorded at cost |
| consistency | use same methods period to period and using the same accounting procedure between periods |
| full disclosure | report full information that gives full report |
| materiality | use GAAP principles when accounting |
| The form that accompanies the payment of taxes to the federal government is a | 940 form |
| The form that contains information necessary to determine the employee's net earnings is a W-3 The form that contains information necessary to determine the employee's net earnings is a | W-3 |
| The form that summarizes the information reported on each employee's report of income and taxes is a/an __________. | W-4 |
| The form used by the employer to report his/her annual unemployment tax is a | W-2 |
| The purchase of a delivery van for cash would __________ | increase the total debits of the trial balance |
| revenue and decrease capital | Performing carpet cleaning services on account would increase |
| The collection of cash from a charge customer would | increase net income and capital |
| When reconciling the bank statement, an NSF check for $480 is included. The entry to record this reconciling item would include a __________. | credit cash |
| FICA tax | employer and employee both pay |
| on each journal page | the year and month are written |
| a business has ___ types of entities | 2 |
| use blank endorsement | if sending check through email |
| even if a general account has a balance of zero, it is | written on a trial balance |
| Medicare ___ funded under social security law | is |
| lost check with blank endorsement can be cashed by | anyone who has the check |
| addition error | if trial balance doesn't equal by 1 |
| transposition slide error | transposition slide error if trial balance doesn't equal and the difference is divisible by 9 there was probably a |
| Jan 31 of the next year | Employers are required to furnish each employee an annual statement of earnings and withholdings before |
| balance is written in the item column | when opening a new page in the accounts receivable ledger |
| debit memo | shows the price deduction taken by a customer for a return and allowance |
| debit side | what is the normal balance for the dividends account |
| federal income tax is withheld in all but two states(t/f) | false |
| special endorsement | when it's written "pay to the order of" and the new check owner's name |
| adjusting entry usually reversed if its these accounts | asset or liability |
| general ledger account | the amount of capital stock at the beginning of the year |
| the month following each calendar quarter | employers must pay unemployment taxes |
| petty cash is a | other revenue or expense |
| balance sheet | which statement show financial strength |
| capital is equal to what after closing entries | number on the balance sheet |
| interest expense credit | reversing entry for accrued interest expense |
| reversing entry for accrued interest income | income from interest gets debited and interest recieveable gets credited |
| interest earned but not received | realization of revenue |
| if cash short and over has a debit balance it is | other expense |
| amount available during the fiscal period | supplies in debit column of trial balance |
| beginning balance | merchandise inventory in the debit column of the trial balance |
| where do you get info for closing entries? | income statement and balance sheet section of the worksheet |
| stockholders equity | total investment to all owners |
| receipt | source document for recording cash received from signing a note payable |
| when is periodic inventory taken? | end of a fiscal period |
| quarterly | each employer must file a federal tax return showing the federal income tax and social security and medicare taxes due to the government |
| entry to establish petty cash | Petty cash debit and cash credit |
| income summary | not on any financial statements |
| land not depreciated | government prohibits it |
| FOB shipping point | paid by supplier |
| invoice | source doc for buying on account |
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