Accounting 11 Vocabulary

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Accounts payable

Back 1

The money that a business owes to its creditors. This Money is a liability of the business.

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Accounts Receivable

Back 2

The money that is owed to a business by its customers. This money is considered an asset of the business.

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Asset

Back 3

Anything that has a dollar value

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Balance Sheet

Back 4

A statement showing the financial position (assets, liabilities, and capital) of an individual, company, or other organization on a certain date.

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Balance Sheet

Back 5

A statement showing the financial position (assets, liabilities, and capital) of an individual, company, or other organization on a certain date.

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Liability

Back 6

A debt of an individual, business, or other organization

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Liquidation

Back 7

The sale of the assets of the business for cash

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Liquidity

Back 8

The ease at which an asset can be converted to cash

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Principle of conservatism

Back 9

Accounting for a business should be fair and reasonable. Assets of profits should not be overstated or understated

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Qccount

Back 10

A specifically ruled page used to record financial changes. There is one for each different item affecting the financial position

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Account balance

Back 11

The value of an account showing the dollar amount and an indication as to whether it is a debit or credit value

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Accounting entry

Back 12

All the changes in the accounts caused by one business transaction, expressed in terms of debits and credits. The total of the debit amounts will equal the total of the credit amounts.

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Business transaction

Back 13

A financial event that changes the values in certain accounts and therefore affects the financial position of the business

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Business Entity Concept

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The accounting for a business or organization is to be kept separate from the personal affairs of its owner, or from any other business of organization.

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Capital

Back 15

The difference between the total assets and the total liabilities of a business. Same as Net worth.

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Continuing concern concept

Back 16

The accounting for a business is based on the assumption that the business will continue to operate, unless it is known that it will not.

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Creditor

Back 17

Anyone who is owed money by the business

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Debtor

Back 18

Anyone who owes the business money

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Financial position

Back 19

The status of a business, as represented by the assets, liabilities, and owners equity

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Fundamental accounting equation

Back 20

The equation that states the total assets are equal to the total liabilities and owners equity

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GAAP

Back 21

Generally accepted accounting principles

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Generally accepted accounting principles

Back 22

Guidelines established by professional accountants to be followed in the preparation of accounting records and financial statements

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Credit

Back 23

To recorrd an amount on the right hand side of an account

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Debit

Back 24

To record an amount on the left hand side of an account

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Double entry system of accounting

Back 25

The system of accounting in general use in which every transaction is recorded both as a debit in one or more accounts and as a credit in one or more accounts

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in balance

Back 26

A state in which the total value of all the accounts (or columns in a journal) with the debit balances is equal to the total value of all the credit in one or more accounts

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ledger

Back 27

A group or file of accounts that can be stored as pages in a book, as cards in a tray, as tape on a reel, or a magnetically on disk

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objectivity principle

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Accounting will be recorded on the basis of objective evidence (source documents) not personal opinion or feelings

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on account

Back 29

An item purchased or sold that is not paid for at the time; money received or paid to reduce an amount owed

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out of balance

Back 30

A state in which the total value of all the accounts (or columns in a journal) with debit balances does not equal the total value of all the credit

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pin totals/pencil footings

Back 31

Tiny pencil-figure used in accounts and journals

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source document

Back 32

A business paper, such as an invoice, that is the original record of a transaction and that provides the information needed when accounting for the transaction

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Taking off a trial balance

Back 33

The process of comparing the total value of the debit accounts with the total value of credit accounts in a ledger

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trial balance

Back 34

A special listing of all the account balances in a ledger, the purpose of which is to see if the dollar value of the accounts with debit balances is equal to the dollar value of the accounts with credit balances.

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Accounting Period/Fiscal Period

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The period of time over which the earnings of a business are measured

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Chart of Accounts

Back 36

A list of the accounts of a business and their numbers, arragend according to their order in the ledger

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Drawings

Back 37

A decrease in Owner's Equity resulting from a personal withdrawal of funds or other assets by the owner

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Expense

Back 38

A decrease in owner's equity resulting from a personal withdrawal of funds or other assets by the owner

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Income Statement

Back 39

A financial statement that summarizes the items of revenue and expense, and shows the net income or the net loss of a business for a given fiscal period

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Matching Principle

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Each expense item related to revenue must be recorded in the same accounting period as the revenue it helped to earn

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Net income

Back 41

The difference between total revenues and the total expenses if the revenues are greater than the expenses

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Net loss

Back 42

The difference between the total if the expenses are greater than the revenues

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Revenue

Back 43

An increase in equity resulting from the proceeds of the sale of goods or services

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Revenue recognition Convention

Back 44

Revenue recoded in the accounts at the time the transaction is completed

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Time period concept

Back 45

Accounting takes place over specific time periods known as fiscal periods

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Bank Credit Advice

Back 46

A business form used by a bank to inforrm a depositor that an increase has beeen made in their bank account and the reason for it

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Bank Debit Advice

Back 47

A business form used by the bank to inform a depsitor that an increase has been made in their bank account and why

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Book of original entry

Back 48

Any journal

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Cash receipts daily summary

Back 49

A business paper, prepared daily, that lists themonies received by a business from customers on account and other sources

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Cash Sales Slip

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A business form showing the details of a transaction in which goods or sevices are sld to a customer for cash

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Cheque Copy

Back 51

A copy of a cheque used as the surce document for a payment made by cheque

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cost principle

Back 52

Accounting for purchases must be at the cost price to the purchaser

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Goods and Services Tax (GST)

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In Canada, a value added tax collected by the seller of most goods and services and remitted to the federal government

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Hamonized Sales Tax (HST)

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A tax, collected in NB, NS, and NFL, that is a combined provincial sales tax and the goods and services tax. it is charged on the same itema as the goods and services tax

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Journal

Back 55

A specifically ruled book in which accounting entries are recorded in the order in which they occur

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journal entry

Back 56

An accounting entry in the journal

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journalizing

Back 57

The process of recording entries int he journal

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Opening entry

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The first accounting entry in the general journal, the entry that records the beginning financial position of a business, thereby opening the books of account

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Point of Sale Summary

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A document that provides informatin to the business on sales at that location for that day

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Point of sale terminal

Back 60

an electronic cash register that is connected to and is able to interact with a central computer

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provincial sales tax (PST)

Back 61

A percentage based tax, established by the provincial government, on the price of goods sold to a customer

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Purchase invoice

Back 62

The name given to a supplier's sales invoice in the office of the purchaser

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Remittance advice

Back 63

The tear off portion of a cheque or a seperate business form accompanying a cheque, which eexplains what the cheque is for

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retail sales tax

Back 64

A percentage based tax added to the price of goods sold to a customer

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sales invoice

Back 65

a business form, prepared whenever goods or services are sold on account, showing a description of goods or servies, the price, and other information

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Source document

Back 66

A business paper, such as an invoice, that is the original record of a transaction and that provides the information needed when accounting fr thhe transaction

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transaction log

Back 67

A document generated by a point-of-sale terminal that contains detailed information about each transaction

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Accounting Title

Back 68

The name of the item for which

an account is prepared, entered at the

top of the account page.

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Balance column Account

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The most commonly used type of account, in which there are three

money columns, one for the debit amounts, one for the credit

amounts, and one for the amount of the balance.

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Correcting journal entry

Back 70

An accounting entry to rectify the effect of an error

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Cross-referencing

Back 71

Part of the posting sequence in which the journal page number for a

given entry is recorded in the appropriate account, and the account

number, in turn, is recorded on the journal page.

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Decimal Point error

Back 72

A mistake caused by misplacing the decimal point in an amount

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forward

Back 73

The process of continuing an account or journal on a new page by

carrying forward all relevant information from the completed page.

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Opening an account

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The process of setting up a new account in the ledger

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Posting

Back 75

The process of transferring the accounting entries from the journal to

the ledger.

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Transposition Error

Back 76

A mistake caused by the interchanging of digits when transferring

figures from one place to another

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accountability

Back 77

The obligation of management (or other group or person) to supply

evidence, usually periodic, of its action or performance as required

by custom, regulation, or agreement.

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account-form

Back 78

A balance sheet which presents the information in a side-by-side or

horizontal format.

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Classified Balance sheet

Back 79

A financial statement in which data are grouped according to major

categories.

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common size statements

Back 80

A financial statement that shows individual items as percentages of a

selected figure, known as the base figure.

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consistency principle

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The principle requires that a business must use the same accounting methods and procedures from period to period

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control account

Back 82

A general ledger account, the balance of which represents the sum of

the balances in the accounts contained in a subsidiary ledger.

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current asset

Back 83

Unrestricted cash, an asset that will be converted into cash within one

year, or an asset that will be used up within one year.

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current liability

Back 84

A short-term debt, payment of which is expected to occur within one

year.

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fixed asset/plant&equipment

Back 85

A long-term asset held for its usefulness in producing goods or

services.

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full disclosure principle

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This principle states that all information needed for a full

understanding of a company's financial statements must be included

with the financial statements.

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long-term liabiltiy

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A liability which, in the ordinary course of business, will not be paid

within one year.

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materiality principle

Back 88

This principle requires accountants to follow generally accepted

accounting principles except when to do so would be expensive or

difficult, and where it makes no real difference if the rules are ignored.

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report form

Back 89

A balance sheet which presents the information in a vertical format

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trend analysis

Back 90

A document that presents financial data in percentages, for a number

of periods, so that tendencies can be seen that are not evident when

looking at the dollar figures alone.

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working capital

Back 91

The difference between the current assets and the current liabilities of

a business.

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worksheet

Back 92

An informal business form prepared in pencil on columnar

bookkeeping paper, used to organize and plan the information for the

financial statements.

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Adjusting entry

Back 93

An entry made before finalizing the books for the period to apportion

amounts of revenue or expense to the proper accounting periods or

operating divisions.

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audit

Back 94

An examination of the accounting records and internal controls of a

business in order to be able to express an opinion about the

business's financial position and results of operation.

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closing an account

Back 95

To cause an account to have a nil balance by means of a journal

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contra/valuation

Back 96

An account that must be considered along with a given asset account

to show the true book value of the asset account.

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declining-balance

Back 97

A method of calculating the annual depreciation of an asset as a fixed

percentage of the remaining value of the asset.

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depreciation

Back 98

The decrease in value of a fixed asset over time

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income summary

Back 99

The temporary account to which the total revenues and the total

expenses are transferred during the closing process.

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nominal account

Back 100

An account with a balance that does not carry into the next fiscal

period, for example, Revenue, Expense, and Drawings accounts.

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post-closing

Back 101

The trial balance that is taken after the closing entries have been

posted.

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prepaid expense

Back 102

An expense, other than for inventory, with benefits that extend into the

future, paid for in advance.

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real account

Back 103

An account the balance of which is not closed out at the end of the

fiscal period but which is carried forward into the succeeding period.

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straight-line

Back 104

A method of calculating the deprectiation of an asset whereby the

deprectiation is apportioned equally to each year of the asset's life.

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bank reconcilliation

Back 105

A routine procedure to find out the reasons for a discrepancy

between the balance on deposit as shown by the bank and the

balance on deposit as shown by the depositor.

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bank reconcilliation statement

Back 106

A statement showing the differences between a bank account as

reflected in the books of the bank and the same account as reflected

in the books of the depositor.

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cash proof

Back 107

An accounting procedure that compares cash receipts, according to

the source documents, against cash receipts according to a physical

count.

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cash short or over

Back 108

The amount of money by which the business's cash receipts for the

day are more or less than what they should be.

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current bank account

Back 109

A type of deposit account offered by the bank specifically to meet the

needs of businesses.

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float

Back 110

A small quantity of bills and coins placed in the drawer of a cash

register at the beginning of the day for the purpose of making change

for customers.

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imprest method for petty cash

Back 111

The method of handling petty cash in which the removal of monies is

only recorded in the accounts at the time when the fund is

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internal control

Back 112

The plan of organization and all the coordinated methods used to

protect assets, ensure accurate, reliable accounting data, encourage

efficiency, and adhere to company policies.

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late deposit

Back 113

A deposit that is made on the last day (usually) of the period covered

by the bank statement but does not appear on the bank statement

until the following period.

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NSF Cheque

Back 114

A cheque that was not cashed when presented to the issuer's bank

because there were not sufficient funds in the issuer's bank account

to cover the amount of the cheque.

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outstanding cheque

Back 115

A cheque that is issued and recorded, but not cashed, during the

period covered by a bank statement, and therefore is not recorded on

the bank statement.

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payment system

Back 116

A method that people use to exchange one value for another.

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petty cash fund

Back 117

A small quantity of cash that is kept in the office for small

expenditures.

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petty cash voucher

Back 118

A form that is filled out when money is removed from the petty cash

fund and no bill for the expenditure is available.

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point-of-sale terminal

Back 119

An electronic cash register that is connected to and is able to interact

with a central computer.

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purchase order

Back 120

A business form initiated by the Purchasing Department authorizing

the supplier to ship certain goods or to perform certain services as

detailed on the form, and to send a bill for these goods or services.

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replenishing petty cash

Back 121

The procedure whereby the petty cash fund is renewed when it

reaches a lower limit.

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restrictive edorsement

Back 122

An endorsement that places a condition on the cashing or depositing

of a cheque.

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cash discount

Back 123

A reduction that may be taken in the amount of a bill provided that the

full amount is paid within the discount period shown on the bill.

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cash refund

Back 124

The return of money to the buyer by the seller in respect to deficient

goods that were paid for and later returned.

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cash-on-delivery

Back 125

A term of sale whereby goods must be paid for at the time they are

delivered.

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cost accounting

Back 126

A specialized area of accounting that concentrates on determining,

controlling, and reporting the costs of doing business.

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cost of goods manufactured

Back 127

Total costs of raw materials, direct labour, and factory overhead in a

fiscal period.

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cost of goods sold

Back 128

The total cost of goods sold during an accounting period.

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credit invoice/note

Back 129

A business form issued by a vendor to reverse a charge that has

been made on a regular sales invoice.

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direct labour

Back 130

An expense that has a direct link in making finished goods, for

example, workers on an assembly line.

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duty

Back 131

Special charges imposed by the government of a country on certain

goods imported from a foreign country.

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factory overwhelmed

Back 132

Costs that include a range of expenses that support the

manufacturing process.

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freight-in

Back 133

Transportation charges on incoming merchandise.

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goods in process

Back 134

Goods that have had some raw materials, direct labour, or factory

overhead applied to them, but that are not yet in a finished state.

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gross profit

Back 135

In a trading business, the excess of net sales over the cost of goods

sold.

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indirect labour

Back 136

An account that represents wages to workers who support the

manufacturing process, for example, janitorial staff.

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manufacturing business

Back 137

A business that buys raw materials which it converts into new

products and sells to earn a profit.

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accounts payable ledger

Back 138

A book or file containing all the accounts of ordinary creditors

representing amounts owed to them by the business.

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accounts receivable

ledger

Back 139

A book or file containing all the accounts of debtors representing

amounts owed by them to the business.

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cash payments journal

Back 140

A special columnar journal used to record all transactions that directly

cause a decrease in the bank balance.

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cash receipts journal

Back 141

A special columnar journal in which are recorded the accounting

entries for all transactions that directly cause an increase in the bank

balance.

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control account

Back 142

A general ledger account, the balance of which represents the sum of

the balances in the accounts contained in a subsidiary ledger.

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cross-balancing

Back 143

The procedure whereby the total of all the debits in a journal is

checked against the total of all the credits in the journal to make sure

that the two totals agree.

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five journal system

Back 144

An accounting system in which five journals are kept in process at the

same time, each one recording transactions of a particular type.

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general ledger

Back 145

A book or file containing all the accounts of the business other than

those in the subsidiary ledgers.

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multi-columnar journals

Back 146

A journal containing a number of columns in which items of a similar

nature are grouped during the recording phase.

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purchase journal

Back 147

A special columnar journal in which are recorded the accounting

entries for all transactions involving the buying of goods or services

on account.

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sales journal

Back 148

A special columnar journal in which are recorded the accounting

entries for all transactions involving the buying of goods or services

on account.

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subsidary ledger

Back 149

A special columnar journal in which are recorded the accounting

entries for all transactions involving the buying of goods or services

on account.

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synoptic journal

Back 150

A multi-columned journal with a number of selected special columns

and two general columns.