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150 Cards in this Set
- Front
- Back
Accounts payable |
The money that a business owes to its creditors. This Money is a liability of the business. |
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Accounts Receivable |
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 |
Anything that has a dollar value |
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Balance Sheet |
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 |
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 |
A debt of an individual, business, or other organization |
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Liquidation |
The sale of the assets of the business for cash |
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Liquidity |
The ease at which an asset can be converted to cash |
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Principle of conservatism |
Accounting for a business should be fair and reasonable. Assets of profits should not be overstated or understated |
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Qccount |
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 |
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 |
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 |
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 |
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 |
The difference between the total assets and the total liabilities of a business. Same as Net worth. |
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Continuing concern concept |
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 |
Anyone who is owed money by the business |
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Debtor |
Anyone who owes the business money |
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Financial position |
The status of a business, as represented by the assets, liabilities, and owners equity |
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Fundamental accounting equation |
The equation that states the total assets are equal to the total liabilities and owners equity |
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GAAP |
Generally accepted accounting principles |
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Generally accepted accounting principles |
Guidelines established by professional accountants to be followed in the preparation of accounting records and financial statements |
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Credit |
To recorrd an amount on the right hand side of an account |
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Debit |
To record an amount on the left hand side of an account
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Double entry system of accounting |
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 |
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 |
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 |
Accounting will be recorded on the basis of objective evidence (source documents) not personal opinion or feelings |
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on account |
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 |
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 |
Tiny pencil-figure used in accounts and journals
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source document |
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 |
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 |
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 |
The period of time over which the earnings of a business are measured |
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Chart of Accounts |
A list of the accounts of a business and their numbers, arragend according to their order in the ledger |
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Drawings |
A decrease in Owner's Equity resulting from a personal withdrawal of funds or other assets by the owner |
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Expense |
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 |
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 |
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 |
The difference between total revenues and the total expenses if the revenues are greater than the expenses |
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Net loss |
The difference between the total if the expenses are greater than the revenues |
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Revenue |
An increase in equity resulting from the proceeds of the sale of goods or services |
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Revenue recognition Convention |
Revenue recoded in the accounts at the time the transaction is completed |
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Time period concept |
Accounting takes place over specific time periods known as fiscal periods |
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Bank Credit Advice |
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 |
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 |
Any journal |
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Cash receipts daily summary |
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 |
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 |
A copy of a cheque used as the surce document for a payment made by cheque |
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cost principle |
Accounting for purchases must be at the cost price to the purchaser |
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Goods and Services Tax (GST) |
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) |
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 |
A specifically ruled book in which accounting entries are recorded in the order in which they occur |
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journal entry |
An accounting entry in the journal |
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journalizing |
The process of recording entries int he journal |
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Opening entry |
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 |
A document that provides informatin to the business on sales at that location for that day |
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Point of sale terminal |
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) |
A percentage based tax, established by the provincial government, on the price of goods sold to a customer |
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Purchase invoice |
The name given to a supplier's sales invoice in the office of the purchaser |
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Remittance advice |
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 |
A percentage based tax added to the price of goods sold to a customer |
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sales invoice |
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 |
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 |
A document generated by a point-of-sale terminal that contains detailed information about each transaction |
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Accounting Title |
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 |
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 |
An accounting entry to rectify the effect of an error |
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Cross-referencing |
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 |
A mistake caused by misplacing the decimal point in an amount |
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forward |
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 |
The process of setting up a new account in the ledger |
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Posting |
The process of transferring the accounting entries from the journal to the ledger. |
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Transposition Error |
A mistake caused by the interchanging of digits when transferring figures from one place to another |
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accountability |
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 |
A balance sheet which presents the information in a side-by-side or horizontal format. |
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Classified Balance sheet |
A financial statement in which data are grouped according to major categories. |
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common size statements |
A financial statement that shows individual items as percentages of a selected figure, known as the base figure. |
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consistency principle |
The principle requires that a business must use the same accounting methods and procedures from period to period |
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control account |
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 |
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 |
A short-term debt, payment of which is expected to occur within one year. |
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fixed asset/plant&equipment |
A long-term asset held for its usefulness in producing goods or services. |
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full disclosure principle |
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 |
A liability which, in the ordinary course of business, will not be paid within one year. |
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materiality principle |
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 |
A balance sheet which presents the information in a vertical format |
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trend analysis |
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 |
The difference between the current assets and the current liabilities of a business. |
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worksheet |
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 |
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 |
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 |
To cause an account to have a nil balance by means of a journal |
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contra/valuation |
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 |
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 |
The decrease in value of a fixed asset over time |
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income summary |
The temporary account to which the total revenues and the total expenses are transferred during the closing process. |
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nominal account |
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 |
The trial balance that is taken after the closing entries have been posted. |
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prepaid expense |
An expense, other than for inventory, with benefits that extend into the future, paid for in advance. |
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real account |
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 |
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 |
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 |
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 |
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 |
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 |
A type of deposit account offered by the bank specifically to meet the needs of businesses. |
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float |
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 |
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 |
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 |
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 |
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 |
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 |
A method that people use to exchange one value for another. |
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petty cash fund |
A small quantity of cash that is kept in the office for small expenditures. |
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petty cash voucher |
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 |
An electronic cash register that is connected to and is able to interact with a central computer. |
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purchase order |
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 |
The procedure whereby the petty cash fund is renewed when it reaches a lower limit. |
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restrictive edorsement |
An endorsement that places a condition on the cashing or depositing of a cheque. |
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cash discount |
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 |
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 |
A term of sale whereby goods must be paid for at the time they are delivered. |
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cost accounting |
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 |
Total costs of raw materials, direct labour, and factory overhead in a fiscal period. |
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cost of goods sold |
The total cost of goods sold during an accounting period. |
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credit invoice/note |
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 |
An expense that has a direct link in making finished goods, for example, workers on an assembly line. |
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duty |
Special charges imposed by the government of a country on certain goods imported from a foreign country. |
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factory overwhelmed |
Costs that include a range of expenses that support the manufacturing process. |
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freight-in |
Transportation charges on incoming merchandise. |
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goods in process |
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 |
In a trading business, the excess of net sales over the cost of goods sold. |
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indirect labour |
An account that represents wages to workers who support the manufacturing process, for example, janitorial staff. |
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manufacturing business |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
A multi-columned journal with a number of selected special columns and two general columns. |