Accounting Glossary

airbud123's version from 2015-09-20 16:13

Section 1

Question Answer
accounta device for recording the changes (increases or decreases) in the fundemental accounting elements
account balancethe difference between the total debits and the total credits in an account 
accountantone who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports
accountinga language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data
accounting cyclethe process involved in journalizing, posting to the ledger, taking a trail balance, preparing statements, making adjusting and closing entries, and preparing a post-closing trail balance, which is repeated each fiscal period

Section 2

Question Answer
accounting equationA = L + OE assets=liabilities+owener's equity
account payablean unwritten promise to pay creditors for property such as merchandise, supplies or equipment purchased on credit, or for services received on credit
account receivablean unwritten promise by a customer to pay at a later date for goods sold or services rendered
accounts receivable turnovermeasures how many times per year receivables are collected. -net credit sales divided by Average Accounts receivable -average receivable (Beginning Accounts Receivable minus (-) ending accounts receivable) divided by 2
accrual accountingrecording in each fiscal period applicable expenses, whether paid or not, and income earned

Section 3

Question Answer
accrued expensean expense incurred in operating a business during an accounting period but not yet paid
accrued incomeincome actually earned during an accounting period but which will not be received until a future period
acid test ratio/quick ratioquick assets divided by current liabilites
activity analysismeasures how efficiently a firm is utilizing its assets 
adjusted trail balancea trail balance taken after adjusting entries have been recorded

Section 4

Question Answer
adjusting entriesentries made at the conclusion of a fiscal period to bring accounts up to date
age of accounts receivablemeasures the average time required to collect receivables -365 divided by accounts receivable turnover
age of inventorymeasures the average time required to sell inventory - 365 divided by Inventory turnover
allowance for doubtful accounts (allowance for bad debts)a contra account utilized to accumulate totals against accounts recievable
analyzingdetermining the fundamental significance of business transactions so that financial information may be properly processed

Section 5

Question Answer
assetsproperty of monetary value owned by a business
bad debts expense/uncollectible accounts expense/loss form uncollectible accountsaccounts receivable that are uncollectible
balance sheet (Statement of Financial Position; Statement of Financial Condition)a formal financial statement illustrating the assets, liabilities, and owner's equity of a business as of a specific date (A=L+C-W)
balance sheet common-size statements/percentage methodexpress the major items in the balance sheet as a percent of the total assets and compare with previous fiscal periods
balance sheet comparative formsrecord the balance sheet data for two or more comparable periods on the same form so that the information can be readily compared

Section 6

Question Answer
bank drafta check drawn by one bank on another bank in which it has funds on deposit
bank statement reconciliationthe process by which the depositor verifies agreement between his checkbook balance and the bank statement balance
bank statementan itemized listing prepared by the bank of additions to and subtractions from a depositor's account
bankers method/360 day methoda method of computing interest based on the assimption that there are 360 days in a year
blank endorsementthe handwritten signature of the payee on the back of the check

Section 7

Question Answer
bookkeeper/information processorone who is involved in the process of recording financial information in a prescribed manner
bookkeepinga recording of financial information in a prescribed manner
book value/undepreciated costthe cost of a fixed asset less its accumulated depreciation
budgeta formal written statement, which may be based upon adjusted historical data, of management's plans for the future expressed in financial terms
business papers (source documents)the first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc

Section 8

Question Answer
calender yeara twelve month period beginning Jan 1st and concluding on Dec 31st
cancelled checka check that has been paid by the bank and returned to the drawer for recordkeeping
capital (net worth; owner's equity; proprietorship)the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business
cashcoins, currency (paper money), checks, credit card receipts, and money orders received from other, as well as money deposited in the bank
cash basis accountingan accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid

Section 9

Question Answer
cash discountsdiscounts from quoted prices as an inducement for prompt payment of invoices
cash payments journala book of orginal entry in which only cash disbursements are recorded
cash payments/cash disbursementsmoney and money substitutes paid
cash receipts journala book of original entries in which only cash receipts are recorded
cash short and overa special ledger account that is used to keep track of unexplained shortages or overages of cash

Section 10

Question Answer
cashiers checka check drawn by a bank on its own funds and signed by an officer of the bank
certified checka check that carries the guarantee of the bank that sufficient funds are avaiable to pay the check when it is presented
Certified Public Accountant/C.P.Aan individual possessing a college education,having practical experience in accounting and who has passed a comprehensive state examination in order to be certified to practive public accounting in that state
checka piece of commercial paper drawn on funds in a bank account and payable on demand
chart of accountsa list of all the account titles and the account numbers assigned to them

Section 11

Question Answer
check stuba form on which information is recorded by the drawer of a check concerning the check drawn; a source of document
chronologicalin accounting, to record in order of time
classifyingthe sorting of the many business transactions in on orderly and systematic manner
closing entriesentries made at the end of each reporting period to transfer the balances of the temporary owner's equity accounts to the permanent owner's equity account and to reduce the balance in the temporary owner's equity accounts to zero in preparation for the next accounting period
combination journala book of original entry which combines into one journal the features of two column general journal and a special journal

Section 12

Question Answer
compound journal entryan accounting entry that involves more than two accounts
centra accountan account designed to accumulate totals to offset a related account
creditthe right side of a standard account
CRthe abbreviation for credit
credit balancea condition that occurs when the total of the credits in an account is larger than the total of the debits in that account

Section 13

Question Answer
credit memoranduma source document that grants credit to a buyer for purchase return or purchase allowance
creditora business or individual to whom a debt is owed
cross referencinga process of entering the journal page number in the ledger and the ledger account number in the journal
current assetscash or other assets that will be converted into cash or consumed within one year
current asset ratiocurrent assets divided by current liabilities

Section 14

Question Answer
current liabilitiesdebts of a business that are generally paid within one year
current ratiocurrent assets divided by current liabilities
data entry (recording)the committing of a business transaction and the events surrounding such into writing
debitthe left side of a standard account
debit balancea condition that occurs when the total of the debits in an account is larger than the total of the credits in that account

Section 15

Question Answer
debit memorandumitems the bank deducts from the account balance
debtorthe business or individual who owes a debt
deposits in transitdeposits that have been made and added to depositor's checkbook, but which have not yet been listed on the bank statement
deposit ticket/deposit slipa bank form which lists those cash items (currency and coin) and individual checks to be deposited
depreciationthe loss in value of a fixed asset due to wear and tear and the passage of time;or a method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life

Section 16

Question Answer
depreciation expensethat portion of the orignal cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from it use
disbursementa payment
discount perioda specific number of days during which a discount is available if the account is paid
dishonored checka check not paid by the bank when properly presented
double entry accounting/double entry bookkeepinga process of recording equal debits and credits for a single business transaction

Section 17

Question Answer
Dr.the abbreviation for debit
draweea person or concern, usually a bank, that has been ordered to make a payment of a check or draft
drawera person (depositor) who signs a check, ordering a payment made
drawing account/owner withdrawla separate owner's equity accoung in which withdrawls of cash or other assets by the owner for personal use are recorded
employeeone who is under the control and direction of an employer with regard to the performance of employment

Section 18

Question Answer
endorsement (indorsement)the signature of the payee or other holder placed on the back of a check or other negotiable instrument
endorsera person or company whose name is written on the back of a check
E.O.Mend of month
expensea decrease in assets, other than withdrawls by the owner, which result from efforts to produce revenues
face of notethe principle sum the maker of a note promises to pay