Semester Test – Flashcards
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Accounting
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The process of planning, recording, analyzing, and interpreting financial information.
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Accounting equation
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An equation showing the relationship among assets, liabilities, and owner's equity.
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Asset
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Anything of value that is owned.
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Business plan
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A formal written document that describes the nature of a business and how it will operate.
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Capital account
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An account used to summarize the owner's equity in a business.
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Compound interest
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Interest paid on an original amount deposited in a bank plus any interest that has been paid.
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Creditor
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A person or business to whom a liability is owed.
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Entrepreneur
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Someone who owns, operates, and takes the risk of a business venture.
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Equities
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Financial rights to the assets of a business.
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Ethics
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The principles of right and wrong that guide an individual in making decisions.
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Expense
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The cost of goods or services used to operate a business.
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Financial statements
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Financial reports that summarize the financial condition and operations of a business.
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Interest
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An amount paid for the use of money for a period of time.
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Liability
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An amount owed.
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Net worth statement
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A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
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Owner's equity
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The amount remaining after the value of all liabilities is subtracted from the value of all assets.
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Proprietorship
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A business owned by one person.
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Revenue
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An increase in equity resulting from the sale of goods or services.
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Sale on account
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A sale for which payment will be received at at later date.
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Service business
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A business that performs an activity for a fee.
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Transaction
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Any business activity that changes assets, liabilities, or owner's equity.
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Withdrawals
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Assets taken from the business for the owner's personal use.
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Accounts payable
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Amounts to be paid in the future for goods or services already acquired.
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Accounts receivable
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Amounts to be received in the future due to the sale of goods or services.
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Chart of accounts
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A list of accounts used by a business.
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Credit
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An amount recorded on the right side of an account.
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Debit
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An amount recorded on the left side of an account.
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Check
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A business form ordering a bank to pay cash from a bank account.
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Double-entry accounting
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The recording of debit and credit parts of a transaction.
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Invoice
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A form describing the goods or services sold, the quantity, the price, and the terms of sale.
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Journal
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A form for recording transactions in chronological order.
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Journalizing
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Recording transactions in a journal.
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Memorandum
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A form on which a brief message is written to describe a transactions.
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Proving cash
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Determining that the amount of cash agrees with the accounting records.
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Receipt
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A business form giving written acknowledgement for cash received.
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Source document
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A business paper from which information is obtained for a journal entry.
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Correcting entry
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If a transaction has been improperly journalized and posted to the ledger, the incorrect journal entry should be corrected with an additional journal entry, called a correcting entry.
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File maintenance
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The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.
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General ledger
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A ledger that contains all accounts needed to prepare financial statements.
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Ledger
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A group of accounts.
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Opening an account
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Writing an account title and number on the heading of an account.
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Posting
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Transferring information from a journal entry to a ledger account.
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Bank statement
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A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
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Blank endorsement
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An endorsement consisting only of the endorser's signature.
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Canceled check
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A check which has been paid by the bank.
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Cash over
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A petty cash on hand amount that is more than the recorded amount.
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Cash short
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A petty cash on hand amount that is less than the recorded amount.
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Checking account
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A bank account from which payments can be ordered by a depositor.
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Debit card
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A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder.
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Deposit slip
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A bank form which lists the checks, currency, and coins an account holder is adding to a bank account.
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Dishonored check
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A check that a bank refuses to pay.
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Electronic funds transfer
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A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.
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Endorsement
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A signature or stamp on the back of a check transferring ownership.
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Non-sufficient funds check
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A check dishonored by the bank because of insufficient funds in the account of the maker of the check.
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Petty cash slip
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A form showing proof of a petty cash payment.
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Postdated check
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A check with a future date on it.
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Restrictive endorsement
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An endorsement restricting further transfer of a check's ownership.
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Special endorsement
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An endorsement indicating a new owner of a check.
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Voided check
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A check that cannot be processed because the maker has made it invalid.
