question

account

answer

a device for recording the changes (increases or decreases) in the fundemental accounting elements

question

account balance

answer

the difference between the total debits and the total credits in an account

question

accountant

answer

one 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

question

accounting

answer

a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data

question

accounting cycle

answer

the 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

question

accounting equation

answer

A = L + OE assets=liabilities+owener's equity

question

account payable

answer

an unwritten promise to pay creditors for property such as merchandise, supplies or equipment purchased on credit, or for services received on credit

question

account receivable

answer

an unwritten promise by a customer to pay at a later date for goods sold or services rendered

question

accounts receivable turnover

answer

measures 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

question

accrual accounting

answer

recording in each fiscal period applicable expenses, whether paid or not, and income earned

question

accrued expense

answer

an expense incurred in operating a business during an accounting period but not yet paid

question

accrued income

answer

income actually earned during an accounting period but which will not be received until a future period

question

acid test ratio/quick ratio

answer

quick assets divided by current liabilites

question

activity analysis

answer

measures how efficiently a firm is utilizing its assets

question

adjusted trail balance

answer

a trail balance taken after adjusting entries have been recorded

question

adjusting entries

answer

entries made at the conclusion of a fiscal period to bring accounts up to date

question

age of accounts receivable

answer

measures the average time required to collect receivables -365 divided by accounts receivable turnover

question

age of inventory

answer

measures the average time required to sell inventory - 365 divided by Inventory turnover

question

allowance for doubtful accounts (allowance for bad debts)

answer

a contra account utilized to accumulate totals against accounts recievable

question

analyzing

answer

determining the fundamental significance of business transactions so that financial information may be properly processed

question

assets

answer

property of monetary value owned by a business

question

bad debts expense/uncollectible accounts expense/loss form uncollectible accounts

answer

accounts receivable that are uncollectible

question

balance sheet (Statement of Financial Position; Statement of Financial Condition)

answer

a formal financial statement illustrating the assets, liabilities, and owner's equity of a business as of a specific date

question

balance sheet common-size statements/percentage method

answer

express the major items in the balance sheet as a percent of the total assets and compare with previous fiscal periods

question

balance sheet comparative forms

answer

record the balance sheet data for two or more comparable periods on the same form so that the information can be readily compared

question

bank draft

answer

a check drawn by one bank on another bank in which it has funds on deposit

question

back statement reconciliation

answer

the process by which the depositor verifies agreement between his checkbook balance and the bank statement balance

question

bank statement

answer

an itemized listing prepared by the bank of additions to and subtractions from a depositor's account

question

bankers method/360 day method

answer

a method of computing interest based on the assimption that there are 360 days in a year

question

blank endorsement

answer

the handwritten signature of the payee on the back of the check

question

bookkeeper/information processor

answer

one who is involved in the process of recording financial information in a prescribed manner

question

bookkeeping

answer

a recording of financial information in a prescribed manner

question

book value/undepreciated cost

answer

the cost of a fixed asset less its accumulated depreciation

question

budget

answer

a formal written statement, which may be based upon adjusted historical data, of management's plans for the future expressed in financial terms

question

business papers (source documents)

answer

the first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc

question

calender year

answer

a twelve month period beginning Jan 1st and concluding on Dec 31st

question

cancelled check

answer

a check that has been paid by the bank and returned to the drawer for recordkeeping

question

capital (net worth; owner's equity; proprietorship)

answer

the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business

question

cash

answer

coins, currency (paper money), checks, credit card receipts, and money orders received from other, as well as money deposited in the bank

question

cash basis accounting

answer

an accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid

question

cash discounts

answer

discounts from quoted prices as an inducement for prompt payment of invoices

question

cash payments journal

answer

a book of orginal entry in which only cash disbursements are recorded

question

cash payments/cash disbursements

answer

money and money substitutes paid

question

cash receipts journal

answer

a book of original entries in which only cash receipts are recorded

question

cash short and over

answer

a special ledger account that is used to keep track of unexplained shortages or overages of cash

question

cashiers check

answer

a check drawn by a bank on its own funds and signed by an officer of the bank

question

certified check

answer

a check that carries the guarantee of the bank that sufficient funds are avaiable to pay the check when it is presented

question

Certified Public Accountant/C.P.A

answer

an 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

question

check

answer

a piece of commercial paper drawn on funds in a bank account and payable on demand

question

chart of accounts

answer

a list of all the account titles and the account numbers assigned to them

question

check stub

answer

a form on which information is recorded by the drawer of a check concerning the check drawnl; a source of document

question

chronological

answer

in accounting, to record in order of time

question

classifying

answer

the sorting of the many business transactions in on orderly and systematic manner

question

closing entries

answer

entries 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

question

combination journal

answer

a book of orignal entry which combones into one journal the features of two column general journal and a special journal

question

compound journal entry

answer

an accounting entry that involves more than two accounts

question

centra account

answer

an account designed to accumulate totals to offset a related account

question

credit

answer

the right side of a standard account

question

CR

answer

the abbreviation for credit

question

credit balance

answer

a condition that occurs when the total of the credits in an account is larger than the total of the debits in that account

question

credit memorandum

answer

a source document that grants credit to a buyer for purchase return or purchase allowance

question

creditor

answer

a business or individual to whom a debt is owed

question

cross referencing

answer

a process of entering the journal page number in the ledger and the ledger account number in the journal

question

current assets

answer

cash or other assets that will be converted into cash or consumed within one year

question

current asset ratio

answer

current assets divided by current liabilities

question

current liabilities

answer

debts of a business that are generally paid within one year

question

current ratio

answer

current assets divided by current liabilities

question

data entry (recording)

answer

the committing of a business transaction and the events surrounding such into writing

question

debit

answer

the left side of a standard account

question

debit balance

answer

a condition that occurs when the total of the debits in an account is larger than the total of the credits in that account

question

debit memorandum

answer

items the bank deducts from the account balance

question

debtor

answer

the business or individual who owes a debt

question

deposits in transit

answer

deposits that have been made and added to depositor's checkbook, but which have not yet been listed on the bank statement

question

deposit ticket/deposit slip

answer

a bank form which lists those cash items (currency and coin) and individual checks to be deposited

question

depreciation

answer

the 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

question

depreciation expense

answer

that 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

question

disbursement

answer

a payment

question

discount period

answer

a specific number of days during which a discount is available if the account is paid

question

dishonored check

answer

a check not paid by the bank when properly presented

question

double entry accounting/double entry bookkeeping

answer

a process of recording equal debits and credits for a single business transaction

question

Dr.

answer

the abbreviation for debit

question

drawee

answer

a person or concern, usually a bank, that has been ordered to make a payment of a check or draft

question

drawer

answer

a person (depositor) who signs a check, ordering a payment made

question

drawing account/owner withdrawl

answer

a separate owner's equity accoung in which withdrawls of cash or other assets by the owner for personal use are recorded

question

employee

answer

one who is under the control and direction of an employer with regard to the performance of employment

question

endorsement (indorsement)

answer

the signature of the payee or other holder placed on the back of a check or other negotiable instrument

question

endorser

answer

a person or company whose name is written on the back of a check

question

E.O.M

answer

end of month

question

expense

answer

a decrease in assets, other than withdrawls by the owner, which result from efforts to produce revenues

question

face of note

answer

the principle sum the maker of a note promises to pay

question

federal income tax withholding

answer

the amount that an employer must withhold from an employee's pay for income tax purposes

question

federal insurance contributions act

answer

the federal act which requires most employers and employees to pay taxes to support the federal social security program

question

federal umemployment tax act

answer

the federal act imposed upon each employer for the purpose of financing the administration costs of the federal and the state unemployment compensation programs

question

F.I.C.A

answer

abbreviation for Federal Insurance Contributions Act

question

final processing/reporting

answer

the process of communicating the results achieved during an accounting period to others

question

fiscal period

answer

a period of time covered by an income statement

question

fixed assets/long term assets

answer

property of a relatively permanent nature used in the operation of a business and not intended for resale

question

fixed liabilities/long term liabilities

answer

liabilities that are not due and payable within one year

question

footing/pencil footing

answer

a total, written in small pencil figures, under the last entry in a column of an account

question

F.U.T.A

answer

Federal Umemployment Tax Act

question

general journal

answer

a book of original entry in which business transactions are recorded in chronological order

question

general ledger

answer

the book of accounts

question

gross earnings/gross pay

answer

income before any deductions have been made

question

gross profit/gross margin

answer

net sales minus the cost of goods

question

gross profit percentage

answer

gross profit divided by net sales

question

in balance

answer

a condition in which the total of the debits and the total of the credits are equal in an account

question

income/revenue

answer

an inflow of assets as a result of selling a product or providing a service

question

Income Statement Common-Size Statements/ Percentage Method

answer

express the major items in the Income Statement as a percent of Net Sales and compare with previous fiscal periods

question

Income Statement Comparative Forms

answer

record the income statement data for two or more Comparable periods of the same form so that the information can be readily compared

question

Income Statement/ Profit and Loss Statements/ Statement of Operations/Operating Statement

answer

a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period

question

Income Tax

answer

a tax levied on the earnings of individuals and businesses by Federal, state, and local governments

question

Independent Contractor

answer

any 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

question

information processor

answer

bookkeeper

question

intangible assets

answer

those assets that cannot be touched or grasped (examples include patents, copyrights and goodwill)

question

interest

answer

money paid for the use of money

question

interpreting

answer

explaining the significant events or developments that occur, usually taking the form of analysis and comparisons

question

inventory turnover

answer

the 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

question

inventory

answer

a source of document showing quantity, description, prices of items, total amount of purchase and the terms of payment

question

inventory (merchandise)

answer

good purchased for resale at a profit

question

invoice

answer

a source of document showing quantity, description, prices of items, total amount of purchase and the terms of payment

question

journal

answer

see general journal

question

journalizing

answer

the process of recording business transactions in a journal

question

ledger

answer

a book of accounts

question

liabilities

answer

any debts that a business owes

question

liquidity analysis

answer

measures the ability of the firm to meet its current obligations

question

long term assets

answer

Fixed assets

question

long term liabilities

answer

Fixed liabilities

question

loss from uncollectible accounts

answer

bad debts expense

question

maker

answer

an individual who promises to pay on a promissory not' an individual who signs a promissory note

question

maturity date

answer

the date on which payment is due on a promissory note

question

merchandise/inventory

answer

goods purchased for resale at a profit

question

mortgage payable

answer

a long term liability; a written promise that pledges real property as security for payment of a debt

question

N.S.F

answer

not sufficient funds

question

net income/net profit

answer

the difference between gross profit and expenses when gross profit is larger

question

net loss

answer

the difference between gross profit and expenses when expense is larger

question

net pay/net earnings

answer

gross pay less payroll deductions;employees take home pay

question

net purchases

answer

purchases minus purchase returns and allowances minus purchase discounts

question

net sales

answer

sales minus sales returns and allowances minus sales discount

question

net worth

answer

capital

question

note payable

answer

a written promise to pay a creditor a certain amount in the future

question

note receivable

answer

a written promise of a customer to pay the business a sum of money at a future date

question

operating expenses/overhead

answer

expenses incurred in the normal operation of a business

question

operating statement

answer

income statement

question

original cost basis

answer

the amount originally paid for a depreciable asset

question

other expenses

answer

expenses incurred that are not the direct result of regular trading activities of a business

question

other income

answer

income received that is not the direct result of regular trading activities of a business

question

outstanding checks

answer

checks that have been drawn and subtracted from the depositor's checkbook, but which have not yet been presented to the bank for payment

question

overdraft

answer

issuance of a check without sufficient funds in the account when it is presented for payment

question

overhead

answer

operating expenses

question

owner's equity/net worth/capital/proprietorship

answer

the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business

question

owner withdrawls

answer

drawing account

question

payee

answer

a person or company who will receive payment on a promissory note, check, draft or money order

question

pencil footing

answer

footing

question

petty cash fund

answer

a fund of currency and coin established for the payment of small amounts of money

question

petty cash voucher

answer

a form used to reflect payments from the petty cash fund

question

post-closing trail balance

answer

a 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

question

postdated check

answer

a check dated subsequent to (following) its date which will become expenses when consumed or expired

question

posting

answer

the transferal of data from the journal to the ledger

question

prepaid expenses

answer

items that are considered to be assets when acquired, but which will become expenses when consumed or expired

question

principal

answer

the face value of a promissory note upon which interest is computed

question

profit margin

answer

net income divided by bet sales

question

profitability analysis

answer

provides evidence concerning the earnings potential of a company and how effectively the firm is being managed

question

profit and loss statement

answer

income statement

question

promissory note

answer

a 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

question

proprietorship

answer

capital

question

proving the journal

answer

a process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page

question

proving cash

answer

the 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

question

purchase invoice

answer

a source document prepared by the seller listing the items shipped, their cost and the method of shipment (from the buyer's viewpoint)

question

purchase order

answer

a written order by a buyer for merchandise or other property specified in the purchase requisition

question

purchase requisition

answer

a form used to request the responsible person or department to purchase merchandise or other property

question

purchases

answer

a temporary owner's equity account used to record the buying of merchandise for resale

question

purchase discount

answer

a 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

question

purchase journal

answer

a book of original entry used to record purchases of merchandise on credit only

question

purchases returns and allowances

answer

a 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

question

quarterly

answer

a three-month period

question

quick assets

answer

cash, marketable securites,a ccounts,a nd notes receivable

question

quick ratio

answer

acid test ratio

question

rate

answer

the annual percentage rate used to compute interest

question

recording/data entry

answer

the commiting of a business transaction and the events surrounding such into writing

question

reporting

answer

final processing

question

restrictive endorsement

answer

an endorsement that limits the use of funds to the purpose stated -ex: "For Deposit Only"

question

retail sales tax

answer

a tax imposed on tangible personal property sold at retail

question

revenue

answer

income

question

salary

answer

generally considered to be compensation for managerial or administrative services expressed in terms of a month or year

question

sales

answer

a temporary owner's equity account used to record the earning of revenue

question

sales discount

answer

a temporary owner's equity contra account used to record discounts given to customers as an incentive for prompt payment

question

sales invoice

answer

a source document prepared by the seller that lists the items shipped, their cost and the method of shipment (from the seller's viewpoint)

question

sales journal

answer

a book of original entry used for the recording of sales of merchandise on credit only

question

sales returns and allowances

answer

a temporary owner's equity contra account used to record credit given to a customer for shortages damaged goods

question

salvage value

answer

the estimated value of a fixed asset at the end of its useful life

question

source document/business paper

answer

the first record of a business transaction (examples include check stubs, receipts, sales invoices, cash register tapes, etc)

question

special journal

answer

a special journal designed to accumulate date about only one kind of business transaction

question

statement of account

answer

a report sent to each other customer, usually at the end of the month, which indicates the status of their account

question

statement of financial condition/statement of financial position

answer

balance sheet

question

statement of operation

answer

income statement

question

statement of owner's equity/statement of net worth

answer

a formal financial statement which summarizes all of the changes in owner's equity during a specified period of time

question

straight line depreciation

answer

a method in which the depreciable cost basis )original cost basis less salvage value) of asset is apportioned equally over its estimated useful life expressed in terms of months or years

question

stop payment order

answer

an order by a depositor requesting a bank not to pay on a check previously issued

question

summarizing

answer

bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements

question

supplies

answer

a type of asset that will be consumed as it used (examples supplies and office supplies)

question

S.U.T.A

answer

State Unemployment Tax Act

question

T account

answer

a skeleton form of an account used for instructional purposes

question

take home pay/net pay

answer

the amount of pay after deductions (income taxes, FICA taxes, etc) have been subtracted

question

tangible assets

answer

those assets that can be appraised by value or seen or touched

question

temporary owner's equity accounts

answer

accounts utilized to accumulate income, expenses and owner's withdrawls for one accounting period only

question

time/term of note

answer

the period of time from the date of the note to the maturity date

question

transaction analysis

answer

the effect of transactions on the accounting elements

question

transaction

answer

any activity of a business enterprise that involves the exchange of values

question

transposition error

answer

an amount written with the digits in incorrect order

question

trail balance

answer

a work paper proving the equality of the debit and credit balances in the ledger

question

uncollectible accounts expense

answer

bad debts expense

question

UCF

answer

uncollectible funds

question

undepreciated cost

answer

book value

question

useful life

answer

the estimated life of a fixed asset

question

W-2 form

answer

wage and tax statement; a report furnished by the employer for each employee indicating gross earnings and deductions for income and FICA taxes

question

W-4 form

answer

Employees' Withholding Allowance Certificate

question

wage

answer

a form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed

question

worksheet

answer

an expanded trail balance utilizing for computing, classifying, and sorting account balances before preparing the formal financial statements

question

basic accounting theory is based on

answer

double entry

question

the difference between the tow sides of an account

answer

account balance

question

debts that are not due and payable within a year

answer

fixed liabilities

question

the difference between net sales and cost of goods sold

answer

gross margin

question

the process of recording information in the ledger

answer

posting

question

the primary purpose of a business

answer

profit

question

another name for Profit and Loss Statement is

answer

income statement

question

the cost of operating a business

answer

overhead

question

credit side of the T-account

answer

right side

question

accounting equation

answer

-assests=liabilities+owners equity -assets-liabilities=owners equity

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