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132 Cards in this Set
- Front
- Back
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Account |
The form used to record additions and deductions for each individual asset, liability, owner's equity, revenue and expense. |
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Account form of balance sheet |
A balance sheet with assets on the left-hand side and liabilities and capital on the right-hand side. |
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Accounting |
The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information. |
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Accounting Cycle |
The principal accounting procedures employed to process transactions during a fiscal period. |
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Accounting Equation |
The expression of the relationship between assets, liabilities and capital. Most commonly stated as Assets= Liabilities + Owner's Equity |
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Account Payable |
A liability created by a purchase made on credit. |
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Account Receivable |
A claim against a customer for sales made on credit. |
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Accounts Payable Ledger |
The subsidiary ledger containing the individual accounts with suppliers (creditors) |
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Accounts Receivable Ledger |
The subsidiary ledger containing the individual accounts with customers (debtors)
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Accrual |
An expense or a revenue that gradually increases with the passage of time
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Accrual Basis Accounting |
The reporting of all revenues in the period earned, all expenses in the period consumed, all assets in the period purchased, and all liabilities in the period incurred; contrasted with the cash basis of accounting. |
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Adjusting Entry |
An entry required at the end of an accounting period to record an internal transaction and to bring ledger up to date |
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Articles of Partnership |
A formal written contract creating a partnership |
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Asset |
Property owned by a business enterprise |
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Balance of an account |
The amount of difference between the debits and credits that have been entered into an account |
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Balance Sheet |
A financial statement listing the assets, liabilities, and capital of a business entity as of a specific date |
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Bond |
A form of interest-bearing note employed by corporations to borrow on a long-term basis |
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Bookkeeping |
the recording of business data in a prescribed manner |
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Budgeting |
The process of establishing specific goals for future operations and making periodic comparisons of actual results with these goals |
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Business Entity Concept |
The concept that assumes that accounting applies to individual economic units and that each unit is separate and distinct from the persons who supply its assets |
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Business Transaction |
The occurrence of an event or of a condition that must be recorded in the accounting records |
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Capital |
The rights (equity) of the owners in a business enterprise |
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Capital Statement |
A summary of the changes in the capital of a business entity during a specific period of time |
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Capital Stock |
Shares of ownership of a corporation
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Cash Basis Accounting |
The reporting of all revenues and expenses in the period during which cash is received or paid |
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Cash Dividend |
A distribution of cash by a corporation to its shareholders |
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Cash Payments/Receipts Journal |
The journal in which all cash payments/receipts are recorded |
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Certified Public Accountant (CPA) |
An accountant who meets licensing requirements for engaging in the practice of public accounting as a CPA |
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Chart of Accounts |
A listing of all the accounts used by the business enterprise |
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Check Register |
A modified form of cash payments journal used to record all transactions paid by check |
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Closing entry |
AN entry necessary to eliminate the balance of a temporary account in preparation for the following accounting period |
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Common Stock |
The basic ownership class of corporate capital stock |
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Conservatism |
The concept that dictates that in selecting among alternatives, the method or procedure that yields the lesser amount of net income or asset value should be selected |
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Consistency |
The concept that assumes that the same generally accepted accounting principles have been applied in the preparation of successive financial statements |
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Consolidation |
The creation of a new corporation by the transfer of assets and liabilities from two or more existing corporations |
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Contingent Liability |
a potential obligation that will materialize only if certain asset occur in the future
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Controlling account |
Account in the general ledger that summarizes the balances of a subsidiary ledger |
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Corporation |
A separate legal entity that is organized in accordance with law and in which ownership is divided into shares of stockC |
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Cost ledger |
A subsidiary ledger employed in a job order cost system and which contains an account for each job order |
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Cost Principle |
The principle that assumes that the monetary record for properties and services purchased by a business should be maintained in terms of cost |
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Credit |
1. The right side of an account 2. The amount entered on the right side of an account 3. To enter an amount on the right side of an account |
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Credit Memorandum |
The form issued by a seller to inform a debtor that a credit has been posted to the debtor's account receivable |
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Current Asset |
Cash or another asset that may reasonably be expected to be realized in cash or sold or consumed, usually within a year or less through the normal operations of a business |
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Current Liability |
A liability that will be due within a short time (usually one year or less) and that is to be paid out of current assets |
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Current Ratio |
The ratio of current assets to current liabilities |
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Debit |
1. The left side of an account 2. The amount entered on the left side of an account 3. To enter an amount on the left side of an account |
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Debit Memorandum |
The form issued by a purchaser to inform a creditor that a debit has been posted to the creditor's account payable |
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Deferral |
A postponement of the recognition of an expense already paid or a revenue already received. |
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Deficiency |
The debit balance in the capital account or statement of owner's equity of a sole proprietor or a partnership |
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Deficit |
A debit balance in the retained earnings account |
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Depletion |
The cost of metal ores and other minerals removed from the earth
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Depreciation |
The periodic cost expiration of all plant assets except land |
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Differential analysis |
Area of accounting concerned with the effect of alternative courses of action on revenues and costs |
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Differential cost |
The amount of increase or decrease in cost that is expected from a particular course of action compared with an alternative
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Differential Revenue |
The amount of increase or decrease in revenue expected from a particular course of action as compared with an alternativeD
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Direct Expense |
An expense directly traceable to or incurred for the sole benefit of a specific department and ordinarily subject to the control of the department manager |
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Discount Rate |
The rate used in computing the interest to be deducted from the maturity value of a note |
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Dishonored Note Receivable |
A note which the maker fails to pay on the due date |
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Dividend |
A distribution of earnings of a corporation to its owners (stockholders).
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Double-entry accounting |
A system for recording transactions based on recording increases and decreases in accounts so that debits always equal credits |
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Equity |
The right or claim to the properties of a business enterprise |
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Equity Method |
A method of Accounting for investments in common stock, by which the investment account is adjusted for the investor's share of periodic net income and property dividends of the investee |
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Equity per share |
The ratio of stockholder's equity to the related number of shares of stock outsanding |
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Equity security |
Preferred or common stock |
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Expense |
The amount of assets consumed or services used in the process of earning revenue |
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Financial Forecast |
A statement indicating an enterprise's financial plans and expectations for the future |
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Fiscal Year |
The annual accounting period adopted by an enterprise |
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Fixed expense |
An expense that tends to remain constant in amount regardless of variations in volume of activity |
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Flowchart |
A chart depicting in graphic form the major data processing operations related to accounting for a transaction or a series of closely related transactions |
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Fund
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1. Segregation of cash for a special purpose 2. Working capital or cash reported in the funds statement 3. In accounting for nonprofit organizations, an accounting entity with accounts maintained for recording assets, liabilities, capital (called fund balance), revenues and expenditures for a particular purpose |
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Funded |
An appropriation of retained earnings accompanied by a segregation of cash or marketable securities
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Funds statement |
The statement of changes in financial position |
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General Expense |
Expense incurred in the general operation of a business |
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General Journal |
he two-column form used to record journal entries that do not "fit" in any special journals
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General Ledger |
The principal ledger, when used in conjunction with subsidiary ledgers, that contains all of the balance sheet and income statement accounts |
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Generally Accepted Accounting Principles |
Generally accepted guidelines for the preparation of financial statements |
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Going Concern Concept |
The concept that assumes that a business entity has a reasonable expectation of continuing in business at a profit for an indefinite period of time |
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Goodwill |
An intangible asset that attaches to a business as a result of such favorable factors as location, product superiority regulation and management skill. |
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Gross Profit |
The excess of net revenue from sales over the cost of merchandise sold |
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Historical Cost |
The cash or equivalent outlay for goods and services acquired |
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Income from operations |
The excess of gross profit over total operating expenses |
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Income statement |
A summary of the revenues and expenses of a business entity for a specific period of time |
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Income Summary Account |
The account used in the closing process for summarizing the revenue and expense accounts |
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Independent Auditor's Report |
A report accompanying financial statements, in which CPAs express an opinion as to the fairness of the statements |
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Indirect Expense |
An expense that is incurred for an entire business enterprise as a unit and that is not subject to the control of individual department managers |
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Intangible Assets |
A long-lived asset that is useful in the operations of an enterprise, is not held for sale, and is without physical qualities |
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Interim Statement |
A financial statement issued for a period covering less than a fiscal year
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Invoice |
A bill provided by the seller (referred to as a sales invoice ) to a purchaser (referred to as a purchase invoice) for items purchased. |
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Ledger |
The group of accounts used by an enterprise |
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Liability |
A debt of a business enterprise |
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Liquidation |
The winding-up process when a partnership goes out of business |
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Long-term investment |
An investment that is not intended to be a ready source of cash in the normal operations of a business and that is listed in the "investments" section of the balance sheet
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Long-term liability |
A liability that is not due for a comparatively long time (usually for more than a year) |
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Natural Business Year |
A year that ends when a business' activities have reached the lowest point in its annual operating cycle |
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Net Income |
The final figure in the income statement when revenues exceed expenses |
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Net Loss |
The final figure in the income statement when expenses exceeded revenuw
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Net Worth |
The owner's equity in a business |
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Nominal Account
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A revenue or expense account periodically closed to the income summary account; a temporary capital account
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Note Payable |
A written promise to pay, representing an amount owed by a business |
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Note receivable |
A written promise to pay, representing an amount to be received by the business
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Opportunity COst |
The amount of income that would result from the best available alternative to a proposed use of cash or its equivalent.
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Owner's Equity |
The rights of the owners in a business enterprise |
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Partnership |
A business owed by two or more individuals |
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Plant Asset |
A tangible asset of a relatively fixed or permanent nature owed by a business enterprise |
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Post-closing trial balance |
A trial balance prepared after all the temporary accounts have been closed |
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Posting |
The process of transferring debits and credits from a journal to the accounts in the ledger
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Prepaid expense |
A purchased commodity or service that has not been consumed at the end of an accounting period. |
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Private Accounting |
The profession whose members are accountants employed by a business firm or a nonprofit org |
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Profitability |
Ability of a firm to earn income |
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Promissory Note |
A written promise to pay a sum in money on demand or at a definite time |
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Public Accounting |
The profession whose members render accounting services on a fee basis |
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Purchases Journal |
The journal in which all items purchased on accounts are recorded. |
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Real Account |
A balance sheet account |
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Realization |
The sale of assets when a partnership is being liquidated |
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Retained eanings |
Net income retained in a coprporation |
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Revenue |
The amount charged to customers for goods sold or services rendered |
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Sales Journal |
The journal in which all sales of merchandise on account are recorded |
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Securities and Exchange Commission |
The agency that exercise a dominant influence over the development of accounting principles for most companies whose securities are traded in stock exchanges. |
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Slide |
An erroneous movement of all digits in a number, one or more spaces to the right or the left, such as writing P542 as P5420 |
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Sole Proprietorship |
A busniess owned by one individual |
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Solvency |
The ability of a firm to pay its debts as they come due |
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Special Journal
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A journal designed to record a single type of transaction
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Statements of Assets and Liabilities |
The principal financial statement for individuals, presenting both the cost and the estimated market values of assets, a list of liabilities and net equity |
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Stock DIvidend |
Distribution of a company's own stock to its shareholders |
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Stockholder's equity |
The equity of the shareholders in a corporation |
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Sunk Cost |
A cost that is not affected by subsequent decisions |
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TAccount
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A form of account resembling the letter T
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Temporary capital account |
A revenue or expense account periodically closed t the income summary account; a nominal account |
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Trial Balance |
A summary listing of the balances and the titles of the accounts |
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Unearned Revenue
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Revenue received in advance of its being earned
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Voucher |
A document that serves as evidence of authority to pay cash |
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Work sheet |
A working paper used to assist in the preparation of financial statements
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