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45 Cards in this Set
- Front
- Back
Journalizing
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Process of recording a biz transaction is always recorded first in the journal.
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Account numbers
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Numbers assigned to accounts according to chart of accounts.
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Cost principle
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Principle that a purchased asset should be recorded at its actual cost.
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General ledger
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Book or file containing the activity, either manual or computerized, of a biz.
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Journal
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Book in which a person makes original record of a biz transaction" commonly refered to as a book of original entry.
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Ledger account
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Complete record of transactions recorded in a individual account.
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Posting
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Process of transferring figures from journal to ledger accounts.
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Source Documents
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Biz papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place.
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Two-column General Journal
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General journal in which there are two amount columns, one used for debit amount and one used for credit amounts.
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Accounting cycle
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Sequence of steps in accounting process completed during fiscal period.
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Accrual
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Recognition of an expense or a revenue that has been incurred or earned but has not yet been recorded.
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Accrued wages
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Unpaid wages owed to employees for time between end of last pay period and the end of fiscal period.
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Adjusting entries
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Entries that bring the books up to date at the end of the fiscal period.
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Adjustments
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Internal transactions that bring ledger accounts up to date, as a planned part of the accounting procedure. They are first recorded in the adjustments columns of the work sheet when using a manual accounting system.
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Book value
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Cost of an asset minus the accumulated system.
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Contra asset
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Account that is contrary to, or a deduction from, another account; for example, accumulated depreciation, equipment is listed as a deduction from equipment.
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Depreciation
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Expense based on the expectation that an asset will gradually decline in usefulness due to time, wear and tear or obsolescence; cost of the asset is therefore spread out over its estimates useful life.
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Fiscal period
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Any period of time covering a complete accounting cycle, generally consisting of twelve consecutive months.
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Fiscal Year
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A fiscal period consisting of twelve consecutive months.
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Matching principle
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Principle that revenue for one time period is matched up with related expenses for same time period.
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Mixed Accounts
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Certain accounts that appear on trial balance with balances that are partly income statements amounts and partly balance sheet amounts
example-prepaid insurance and insurance expense. |
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Straight-line Depreciation
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Means of calculating depreciation in which cost of an asset, less any trade-in value, is allocated evenly over useful life of asset.
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Work sheet
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Working paper used by accountants to record necessary adjustments and provide up-to-date account balances needed to prepaid the financial statements.
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Accrual basis of accounting
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Accounting method under which revenue is recorded when it is earned, regardless of when it is received, and expenses are recorded when they are incurred, regardless of when they are paid.
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Cash basis of accounting
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Accounting method under which revenue is recorded only when it is received in cash.
Most expenses are recorded only when they are paid in cash. |
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Closing entries
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Entries made at the end of a fiscal period to close off the revenue, expense, and drawing accounts-that is, to make the balances of the temporary-equity accounts equal to zero. Closing is also called clearing the accounts.
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Income Summary account
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Account brought into existence in order to have a debit and credit in each closing entry.
The revenue and expense account balances are transferred to this account to allow calculations of net income or net loss. |
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Interim Statements
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Financial statements prepared during the fiscal year, covering a period of time of less than 12 months.
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Nominal accounts
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Accounts that apply to only one fiscal period and that are to be closed at the end of the fiscal period, such as revenue, expense, income summary, and drawing accounts.
This category may also be described as all accounts except assets, liabilities, and the Capital account. |
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Post-closing trial balance
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The listing of the final balances of the real accounts at the end of the fiscal period.
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Real Accounts
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AKA permanent.
Accounts that remain open and that have balances that will be carried over to the next fiscal period.... Assets liabilities capital accounts in owners equits |
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Simple interest Calculation
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INTEREST = PRINCIPAL X RATE X TIME
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“Banker’s Method”
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computes interest on presumption that there are 360 days in a year.
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“Maturity Date”
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term of note starts from date stated in note until date payment is due.
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Notes Receivable
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When a client gives the business a Note promising to make payment in the future.
asset account |
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Interest income
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income account and will be reported on the Income Statement.
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Notes Payable
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entry when business creates Note promising to pay another party.
liability |
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“Interest Expense”.
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recording...maturity date, principal and the interest is paid Note Payable will be reduced by amount of principal and interest.
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Simple interest Calculation
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INTEREST = PRINCIPAL X RATE X TIME
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“Banker’s Method”
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computes interest on presumption that there are 360 days in a year.
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“Maturity Date”
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term of note starts from date stated in note until date payment is due.
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Notes Receivable
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When a client gives the business a Note promising to make payment in the future.
asset account |
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Interest income
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income account and will be reported on the Income Statement.
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Notes Payable
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entry when business creates Note promising to pay another party.
liability |
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“Interest Expense”.
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recording...maturity date, principal and the interest is paid Note Payable will be reduced by amount of principal and interest.
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