Accounting Glossary II

airbud123's version from 2015-09-20 17:08

Section 1

Question Answer
federal income tax withholdingthe amount that an employer must withhold from an employee's pay for income tax purposes
federal insurance contributions actthe federal act which requires most employers and employees to pay taxes to support the federal social security program
federal umemployment tax actthe federal act imposed upon each employer for the purpose of financing the administration costs of the federal and the state unemployment compensation programs
F.I.C.Aabbreviation for Federal Insurance Contributions Act
final processing/reportingthe process of communicating the results achieved during an accounting period to others

Section 2

Question Answer
fiscal perioda period of time covered by an income statement
fixed assets/long term assetsproperty of a relatively permanent nature used in the operation of a business and not intended for resale
fixed liabilities/long term liabilitiesliabilities that are not due and payable within one year
footing/pencil footinga total, written in small pencil figures, under the last entry in a column of an account
F.U.T.AFederal Umemployment Tax Act

Section 3

Question Answer
general journala book of original entry in which business transactions are recorded in chronological order
general ledgerthe book of accounts
gross earnings/gross payincome before any deductions have been made
gross profit/gross marginnet sales minus the cost of goods
gross profit percentagegross profit divided by net sales

Section 4

Question Answer
in balancea condition in which the total of the debits and the total of the credits are equal in an account
income/revenuean inflow of assets as a result of selling a product or providing a service
Income Statement Common-Size Statements/ Percentage Methodexpress the major items in the Income Statement as a percent of Net Sales and compare with previous fiscal periods
Income Statement Comparative Formsrecord the income statement data for two or more Comparable periods of the same form so that the information can be readily compared
Income Statement/ Profit and Loss Statements/ Statement of Operations/Operating Statementa formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period (R-E) (Revenue-Expenses=Net Income or Net Loss)

Section 5

Question Answer
Income Tax tax levied on the earnings of individuals and businesses by Federal, state, and local governments
Independent Contractorany person who agrees to perform a service for a fee and who is not subject to the control of those for whom the service is performed
information processorbookkeeper
intangible assetsthose assets that cannot be touched or grasped (examples include patents, copyrights and goodwill)
interestmoney paid for the use of money

Section 6

Question Answer
interpretingexplaining the significant events or developments that occur, usually taking the form of analysis and comparisons
inventory turnoverthe number of times the average inventory has been sold or used up (turned over) during a period. Calculatin: 365/cost of goods sold for period/average inventory. Note: average inventory=(beginning inventory+ending inventory) divided by 2
inventorya source of document showing quantity, description, prices of items, total amount of purchase and the terms of payment
inventory (merchandise)good purchased for resale at a profit
invoicea source of document showing quantity, description, prices of items, total amount of purchase and the terms of payment

Section 7

Question Answer
journalizingthe process of recording business transactions in a journal
ledgera book of accounts
liabilitiesany debts that a business owes
liquidity analysismeasures the ability of the firm to meet its current obligations

Section 8

Question Answer
makeran individual who promises to pay on a promissory not' an individual who signs a promissory note
maturity datethe date on which payment is due on a promissory note
merchandise/inventorygoods purchased for resale at a profit
mortgage payablea long term liability; a written promise that pledges real property as security for payment of a debt
N.S.Fnot sufficient funds

Section 9

Question Answer
net income/net profitthe difference between gross profit and expenses when gross profit is larger
net lossthe difference between gross profit and expenses when expense is larger
net pay/net earningsgross pay less payroll deductions;employees take home pay
net purchasespurchases minus purchase returns and allowances minus purchase discounts
net salessales minus sales returns and allowances minus sales discount

Section 10

Question Answer
net worthcapital
note payablea written promise to pay a credit
note receivablea written promise of a customer to pay the business a sum of money at a future dateor a certain amount in the future
operating expenses/overheadexpenses incurred in the normal operation of a business
operating statementincome statement

Section 11

Question Answer
original cost basisthe amount originally paid for a depreciable asset
other expensesexpenses incurred that are not the direct result of regular trading activities of a business
other incomeincome received that is not the direct result of regular trading activities of a business
outstanding checkschecks that have been drawn and subtracted from the depositor's checkbook, but which have not yet been presented to the bank for payment
overdraftissuance of a check without sufficient funds in the account when it is presented for payment

Section 12

Question Answer
overheadoperating expenses
owner's equity/net worth/capital/proprietorshipthe amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business
owner withdrawlsdrawing account
payeea person or company who will receive payment on a promissory note, check, draft or money order
petty cash funda fund of currency and coin established for the payment of small amounts of money

Section 13

Question Answer
petty cash vouchera form used to reflect payments from the petty cash fund
post-closing trail balancea work paper prepared after all the owner's temporary equity accounts have been closed and all permanent accounts have been balanced and ruled, proving the equality of the debits and credits
postdated checka check dated subsequent to (following) its date of issuance. Which will become expenses when consumed or expired
postingthe transferal of data from the journal to the ledger
prepaid expensesitems that are considered to be assets when acquired, but which will become expenses when consumed or expired

Section 14

Question Answer
principalthe face value of a promissory note upon which interest is computed
profit marginnet income divided by bet sales
profitability analysisprovides evidence concerning the earnings potential of a company and how effectively the firm is being managed
profit and loss statementincome statement
promissory notea written promise made by a person or business to pay a certain sum of money to another person or business at a specified time in the future

Section 15

Question Answer
proving the journala process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page
proving cashthe process of determining whether the amount of cash, both on hand and in the bank, is the same as that which is indicated in the accounting records
purchase invoicea source document prepared by the seller listing the items shipped, their cost and the method of shipment (from the buyer's viewpoint)
purchase ordera written order by a buyer for merchandise or other property specified in the purchase requisition
purchase requisitiona form used to request the responsible person or department to purchase merchandise or other property

Section 16

Question Answer
purchasesa temporary owner's equity account used to record the buying of merchandise for resale
purchase discounta temporary owner's equity contra account used to record discounts taken on inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices
purchase journala book of original entry used to record purchases of merchandise on credit only
purchases returns and allowancesa temporary owner's equity contra account utilized to record of merchandise to the manufacturer or supllier as the result of material defects in workmanship and/or inferior product quality
quarterlya three-month period

Section 17

Question Answer
quick assetscash, marketable securites,a ccounts,a nd notes receivable
quick ratioacid test ratio
ratethe annual percentage rate used to compute interest
recording/data entrythe commiting of a business transaction and the events surrounding such into writing
reportingfinal processing

Section 18

Question Answer
restrictive endorsementan endorsement that limits the use of funds to the purpose stated -ex: "For Deposit Only"
retail sales taxa tax imposed on tangible personal property sold at retail
salarygenerally considered to be compensation for managerial or administrative services expressed in terms of a month or year
salesa temporary owner's equity account used to record the earning of revenue

Section 19