FBLA Accounting 1

Return on investment
The ration of the money earned on investment relative to the amount of the investment.
Real property
Land and anything attached to the land.
Personal property
All property not classified as real property.
Assessed value
The value of an asset determined by tax authorities for the purpose of calculating taxes.
Plant asset record
An accounting form on which a business records information about each plant asset.
Gain
An increase in equity resulting from activity other than selling goods or services.
Gain on plant assets
An increase in equity that results when a plant asset is sold for more than book value.
Loss
A decrease in equity resulting from activity other than selling goods or services.
Loss on plant assets
The decrease in equity that results when a plant asset is sold for less than book value.
Accelerated depreciation
Any method of depreciation which records greater depreciation expense in the early years and less depreciation expense in the later years.
Declining-balance method of depreciation
A type of accelerated depreciation that multiplies the book value of an asset by a constant depreciation rate to determine annual depreciation.
Double-declining balance method of depreciation
A declining-balance rate that is two times the straight-line rate.
Intangible asset
An asset that does not have physical substance.
Amortization
The spreading of the cost of an intangible asset over its useful life.
real property
land and anything attached to the land
personal property
all property not classified as real property
assessed value
The value of an asset determined by tax authorities for the purpose of calculating taxes
plant asset record
An accounting form on which a business records information about each plant asset.
gain on plant assets
Revenue that results when a plant asset is sold for more than book value.
loss on plant assets
The loss that results when a plant asset is sold for less than book value.
payroll
list of a business’s employees and the payment due to each employee for a specific pay period
pay period
amount of time for which an employee is paid
payroll clerk
a person who is responsible for preparing the payroll
gross earnings
total amount of money earned by an employee in a pay period
salary
fixed amount of money paid to an employee for each pay period
wage
amount of money paid to an employee at a specificed rate per hour worked
time card
record of the time an employee arrives at work each time, the time the employee leaves, and the total number of hours worked each day
electronic badge readers
computer technology where each employee’s time card has a magnetic strip on which is encoded certain employee information
piece rate
amount paid for each piece produced in a factory or manufacturing plant
commission
amount paid to an employee based on a percentage of the employee’s salary
overtime rate
set by the Fair Labor Standards Act, is 1 and 1/2 times the employee’s regular rate
deduction
the amount that is subtracted from gross earnings
exemption
an allowance claimed by a taxperson that reduces the amount of taxes that must be paid
payroll register
form that summarizes information about an employees’ earnings for each pay period
net pay
amount of money left after all deductions are subtracted from gross earnings
direct deposit
the employee’s net pay is deposited in her or his personal bank account
employee’s earnings record
where the individual payroll record for each employee is recorded
accumulated earnings
each employee’s year to date gorss earnings
unemployment taxes
based on a percentage of their employees’ gross earnings and are collected to provide funds for workers who are temporarily out of work
federal tax deposit coupon
(Form 8109) prepared and sent with the check to show the amount of taxes being sent to the federal governement
form 941
the employer’s quarterly federal tax return
form w-2
summarizes an employee’s earnings and tax deductions for the previous calendar year
form w-3
summarizes the information contained on the employee’s form w-2
form 940
an employer’s annual unemployment tax return
internal controls
those steps the business takes to protect cash and other assets
external controls
those controls provided outside the business (ex. verifying the accuracy of a signature)
checking account
a bank account that allows a bank customer to desposit cash and to write checks against the account balance
check
a written order from a depositor telling the bank to pay a stated amount of cash to the person or business named on the check
depositor
person or business that has cash on deposit in a bank
signature card
contains the signatures of the pesrons authorized to write checks on the bank account
deposit slip
a bank form on which the currency and checks to be deposited are listed (deposit ticket)
endorsement
authorized signature that is written or stamped on the back of a check
restrictive endorsement
restricts or limits how a check may be handled
drawer
the person who signs a check
drawee
bank on which the check is written
voiding a check
writing the words void in large letters across the top of a check
bank statement
itemized record of all the transactions occuring in a depositor’s account over a given period, usually a month
canceled check
returned checks that are stamped and marked with the word paid and the date of the payment
reconciling the bank statement
the process of determining any differences between the balances shown on the bank statement and the checkbook balances
outstanding checks
checks that have been written but not deposited
outstanding deposits
deposits that have been made and recorded in the checkbook but do not appear on the bank statement
bank service charge
fee charged by the bank for mainting bank records and for processing bank statement items for the depositor
stop payment order
demand by the depositor that the bank not honor a certain check
NSF check
one returned by the bank because there are not sufficient funds in the drawer’s checking account to cover the amount of the check
electronic funds transfer system
enables banks to transfer funds from the account of one depositor to the account of another quickly and accurately without the immediate exchange of checks
merchandising business
buys goods such as books, clothing or furniture and then sells those goods for profit
retailer
business that sells to the final user
wholesaler
business that sells to the retailer
merchandise
the goods bought for resale to customers
inventory
the items of merchandise the business has in stock
sale on account
the sale of goods that will be paid for later
charge customer
the customer to whom a slae on account is made
credit cards
entitles a charge customer to charge merchandise
sales slip
form that lists the details of a sale: the date, the name of the customer, and the description, quantity, price
sales tax
tax on the retail sale of goods and service
credit terms
set out the time allowed for payment (total amount of sale/amount of time)
special journals
multicolumn journals that have columns reserved for the recording of specific types of transactions
sales journal
special journal used to record only the sale of merchandise on account
accounts receivable subsidiary ledger
separate ledger that contains accounts for all charge customers
subsidiary ledger
ledger, or book, that is summarized in a controlling account in the general ledger
controlling account
balance must equal the total of all the account balances in the subsidiary ledger
footing
column total written in small pencil figures
Adjusting Entries
Journal entries recorded to update general ledger accounts at the end of a fiscal period.
Permanent Accounts
accounts used to accumulate information from one fiscal period to the next.
Temporary Accounts
Accounts used to accumulate information until it is transferred to the owner’s capital account.
Closing Entries
Journal entries used to prepare temporary accounts for a new fiscal period.
Post-Closing Trial Balance
A trial balance prepared after the closing entries are posted
Accounting Cycle
The serious of accounting activities included in recording financial information for a fiscal period
Stakeholders
Individuals or groups who have an interest in and are affected by the actions of an organization
Component Percentage
The percentage relationship between one financial statement item and the total that includes that item.
Fiscal Period
The length of time for which a business summarizes and reports financial information.
Work Sheet
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements
Trial Balance
A proof of the equality of debits and credits in a general ledger.
Adjustments
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.
Balance Sheet
A financial statement that reports assets, liabilities, and owner’s equity on a specific date.
Income Statement
A financial statement showing the revenue and expenses for a fiscal period.
Net Income
The difference between total revenue and total expenses when total revenue is greater
Net Loss
The difference between total revenue and total expenses when total expenses are greater.
Code of Conduct
A statement that guides the ethical behavior of a company and its employees.
Checking Account
A bank account from which payments can be ordered by a depositor
Endorsement
A signature or stamp on the back of a check transferring ownership
Blank Endorsement
An endorsement consisting only of the endorser’s signature.
Special Endorsement
An endorsement indicating a new owner of a check.
Restrictive Endorsement
An endorsement restricting further transfer of a check’s ownership.
Postdated Check
A check with a future date on it.
Bank Statement
A report of deposits, withdrawals, and bank balance sent to a depositor by a bank
Dishonored Check
A check that a bank refuses to pay.
Electronic Funds Transfer
A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.
Debit Card
A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder.
Petty Cash
An amount of cash kept on hand and used for making small payments
Petty Cash Slip
A form showing proof of a petty cash payment.
Ledger
a group of accounts
General Ledger
A ledger that contains all accounts needed to prepare financial statements.
Account Number
The number assigned to an account.
File Maintenance
The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.
Opening an Account
Writing an account title and number on the heading of an account.
Posting
Transferring information from a journal entry to a ledger account.
Journal
A form for recording transactions in chronological order
Journalizing
Recording transactions in a journal.
Special Amount Column
A journal amount column headed with an account title
General Amount Column
A journal amount column that is not headed with an account title.
Entry
Information for each transaction recorded in a journal
Double-Entry Accounting
The recording of debit and credit parts of a transaction
Source Document
A business paper from which information is obtained for a journal entry
Check
a business form ordering a bank to pay cash from a bank account
Invoice
A form describing the goods or services sold, the quantity, and the price
Sales Invoice
An invoice used as a source document for recording a sale on account
Receipt
A business form giving written acknowledgement for cash received
Memorandum
A form on which a brief message is written describing a transaction
Proving Cash
Determining that the amount of cash agrees with the accounting records.
T Account
An accounting device used to analyze transactions
Debit
An amount recorded on the left side of a T Account
Credit
An amount recorded on the right side of a T account
Normal Balance
The side of the account that is increased.
Chart of Accounts
A list of accounts used by a business
Accounting
Planning, recording, analyzing, and interpreting financial information.
Accounting system
A planned process for providing financial information that will be useful to management.
Accounting Records
Organized summaries of a business’s financial activities.
Service Business
A business that performs an activity for a fee.
Proprietorship
A business owned by one person.
Financial Statements
Financial reports that summarize the financial condition and operations of a business.
Asset
anything of value that is owned
Equities
Financial rights to the assets of a business.
Liability
an amount owed by a business
Owner’s Equity
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
Accounting Equation
An equation showing the relationship among assets, liabilities, and owner’s equity,
Assets = Liabilities + Owner’s Equity
Ethics
the principles of right and wrong that guide an individual in making decisions
Business Ethics
The use of ethics in making business decisions.
Transaction
A business activity that changes assets, liabilities, or owner’s equity.
Account
A record summarizing all the information pertaining to a single item in the accounting equation
Account Title
The name given to an account.
Account Balance
The amount in an account
Capital
the account used to summarize the owner’s equity in a business
Revenue
an increase in owner’s equity resulting from the operation of a business
Sale on Account
A sale for which cash will be recieved at a later date
Expense
a decrease in owner’s equity resulting from the operation of a business
Withdrawls
Assets taken out of a business for the owner’s personal use.