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Account

A record summarizing all the information pertaining to a single item in the accounting equation.

Account Balance

The amount in an account.

Account Number

The number assigned to an account.

Account Title

The name given to an account.

Accounting

Planning, recording, analyzing, and interpreting financial information.

Accounting Cycle

The series of accounting activities included in recording financial information for a fiscal period.

Accounting Equation

An equation showing the relationship among assets, liabilities, and owner's equity.

Accounting Period

A period of time covered by an accounting report.

Accounting Records

Organized summaries of a business's financial activities.

Accounting System

A planned process for providing financial information that will be useful to management.

Accounts Payable Ledger

A subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account.

Accounts Receivable Ledger

A subsidiary ledger containing only accounts for charge customers.

Accrued Expenses

Expenses incurred in one fiscal period but not paid until a later fiscal period.

Accrued Interest Expense

Interest incurred but not yet paid.

Accrued Interest Income

Interest earned but not yet received.

Accrued Revenue

Revenue earned in one fiscal period but not received until a later fiscal period.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded since the purchase of a plant asset.

Adjusting Entries

Journal entries recorded to update general ledger accounts at the end of a fiscal period.

Adjustments

Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.

Allowance Method of Recording Losses from Uncollectible Accounts

Crediting the estimated value of uncollectible accounts to a contra account.

Assessed Value

The value of an asset determined by tax authorities for the purpose of calculating taxes.

Asset

Anything of value that is owned.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Bank Statement

A report of deposits, withdrawals, and bank balance sent to a depositor by a bank.

Batch Report

A report of credit card sales produced by a point-of-sale terminal.

Batching Out

The process of preparing a batch report of credit card sales from a point-of-sale terminal.

Blank Endorsement

An endorsement consisting only of the endorser's signature.

Board of Directors

A group of people elected by the stockholders of a corporation to set the policies for the corporation.

Book Value

The difference between an asset's account balance and its related contra account balance.

Book Value of a Plant Asset

The original cost of a plant asset minus accumulated depreciation.

Book Value of Accounts Receivable

The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts.

Business Ethics

The use of ethics in making business decisions.

Capital

The account used to summarize the owner's equity in a business.

Capital Stock

Total shares of ownership in a corporation.

Cash Discount

A deduction from the invoice amount, allowed by a vendor to encourage early payment.

Cash Over

A petty cash on hand amount that is more than a recorded amount.

Cash Payments Journal

A special journal used to record only cash payment transactions.

Cash Receipts Journal

A special journal used to record only cash receipt transactions.

Cash Sale

A sale in which cash is received for the total amount of the sale at the time of the transaction.

Cash Short

A petty cash on hand amount that is less than a recorded amount.

Chart of Accounts

A list of accounts used by a business.

Check

A business form ordering a bank to pay cash from a bank account.

Checking Account

A bank account from which payments can be ordered by a depositor.

Closing Entries

Journal entries used to prepare temporary accounts for a new fiscal period.

Code of Conduct

A statement that guides the ethical behavior of a company and its employees.

Component Percentage

The percentage relationship between one financial statement item and the total that includes that item.

Contra Account

An account that reduces a related account on a financial statement.

Controlling Account

An account in a general ledger that summarizes all accounts in a subsidiary ledger.

Corporation

An organization with the legal rights of a person and which may be owned by many persons.

Correcting Entry

A journal entry made to correct an error in the ledger.

Cost of Merchandise

The price a business pays for goods it purchases to sell.

Cost of Merchandise Sold

The total original price of all merchandise sold during a fiscal period.

Credit

An amount recorded on the right side of a T account.

Credit Card Sale

A sale in which a credit card is used for the total amount of the sale at the time of the transaction.

Credit Memorandum

A form prepared by the vendor showing the amount deducted for returns and allowances.

Creditor

A person or organization to whom a liability is owed.

Current Assets

Cash and other assets expected to be exchanged for cash or consumed within a year.

Current Liabilities

Liabilities due within a short time, usually a year.

Current Ratio

A ratio that shows the numeric relationship of current assets to current liabilities.

Customer

A person or business to whom merchandise or services are sold.

Date of a Note

The day a note is signed.

Debit

An amount recorded on the left side of a T account.

Debit Card

A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder.

Debit Memorandum

A form prepared by the customer showing the price deduction taken by the customer for returns and allowances.

Declaring a Dividend

Action by a board of directors to distribute corporate earnings to stockholders.

Declining-balance Method of Depreciaion

Multiplying the book value by a constant depreciation rate at the end of each fiscal period.

Depreciation Expense

The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life.

Dishonored Check

A check that a bank refuses to pay.

Dishonored Note

A note that is not paid when due.

Dividends

Earnings distributed to stockholders.

Double-entry Accounting

The recording of debit and credit parts of a transaction.

Draft

A written, signed, and dated order from one party ordering snother party, usually a bank, to pay money to a third party.

Earnings Per Share

The amount of net income after federal income tax belonging to a single share of stock.

Electronic Funds Transfer

A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.

Employee Earnings Record

A business form used to record details affecting payments made to an employee.

Endorsement

A signature or stamp on the back of a check transferring ownership.

Entry

Information for each transaction recorded in a journal.

Equities

Financial rights to the assets of a business.

Estimated Salvage Value

The amount an owner expects to receive when a plant asset is removed from use.

Ethics

The principles of right and wrong that guide an individual in making decisions.

Expense

A decrease in owner's equity resulting from the operation of a business.

Federal Unemployment Tax

A federal tax used for state and federal administrative expenses of the unemployment program.

File Maintenance

The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.

Financial Ratio

A comparison between two items of financial information.

Financial Statements

Financial reports that summarize the financial condition and operations of a business.

First-in, First-out Inventory Costing Method

Using the price of merchandise purchased first to calculate the cost of merchandise sold first.

Fiscal Period

The length of time for which a business summarizes and reports financial information.

Gain on Plant Assets

Revenue that results when a plant asset is sold for more than book value.

General Amount Column

A journal amount column that is not headed with an account title.

General Ledger

A ledger that contains all accounts needed to prepare financial statements.

Gross Profit Method of Estimating Inventory

Estimating inventory by using the previous year's percentage of gross profit on operations.

Gross Profit on Sales

The revenue remaining after cost of merchandise sold has been deducted.

Income Statement

A financial statement showing the revenue and expenses for a fiscal period.

Intellectual Property

Any product that is protected by patents, trademarks, and copyrights.

Interest

An amount paid for the use of money for a period of time.

Interest Expense

The interest accrued on money borrowed.

Interest Income

The interest earned on money loaned.

Interest Rate of a Note

The percentage of the principal that is paid for use of the money.

Inventory Record

A form used during a periodic inventory to record information about each item of merchandise on hand.

Invoice

A form describing the goods or services sold, the quantity, and the price.

Journal

A form for recording transactions in chronological order.

Journalizing

Recording transactions in a journal.

Last-in, First-out Inventory Costing Method

Using the price of merchandise purchased last to calculate the cost of merchandise sold first.

Ledger

A group of accounts

Liability

An amount owed by a business.

List Price

The retail price listed in a catalog or on an internet site.

Long-term Liabilities

Liabilities owed for more than a year.

Lookback Period

The 12-month period that ends on June 30th of the prior year.

Loss on Plant Assets

The loss that results when a plant asset is sold for less than book value.

Maker of a Note

The person or business who signs a note and thus promises to make payment.

Markup

The amount added to the cost of merchandise to establish the selling price.

Maturity Date of a Note

The date a note is due.

Maturity Value

The amount that is due on the maturity date of a note.

Medicare Tax

A federal tax paid for hospital insurance.

Memorandum

A form on which a brief message is written describing a transaction.

Merchandise

Goods that a merchandising business purchases to sell.

Merchandise Inventory

The amount of merchandise on hand for sale to customers.

Merchandising Business

A business that purchases goods and sells goods.

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 is greater.

Net Pay

The total earnings paid to an employee after payroll taxes and other deductions.

Net Sales

Total sales less sales discount and sales returns and allowances.

Normal Balance

The side of the account that is increased.

Notes Payable

Promissory notes signed by a business and given to a creditor.

Notes Receivable

Promissory notes that a business accepts from customers.

Number of a Note

The number assigned to identify a specific note.

Opening an Account

Writing an account title and number on the heading of an account.

Owner's Equity

The amount remaining after the value of all liabilities is subtracted from the value of all assets.

Par Value

A value assigned to a share of stock and printed on the stock certificate.

Pay Period

The period covered by a salary payment.

Payee of a Note

The person or business to whom the amount of a note is payable.

Payroll

The total amount earned by all employees for a pay period.

Payroll Register

A business form used to record payroll information.

Payroll Taxes

Taxes based on the payroll of a business.

Periodic Inventory

A merchandise inventory determined by counting, weighing, or measuring items of merchandise on hand.

Permanent Accounts

Accounts used to accumulate information from one fiscal period to the next.

Perpetual Inventory

A merchandise inventory determined by keeping a continuous record of increases, decreases, and balance on hand.

Personal Property

All property not classified as real property.

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.

Plant Asset Record

An accounting form on which a business records information about each plant asset.

Plant Assets

Assets that will be used for a number of years in the operation of a business.

Point-of-sale Terminal

A computer used to collect, store, and report all the information of a sales transaction.

Post-closing Trial Balance

A trial balance prepared after the closing entries are posted.

Postdated Check

A check with a future date on it.

Posting

Transferring information from a journal entry to a ledger account.

Price-earnings Ratio

The relationship between the market value per share and earnings per share of a stock.

Principal of a Note

The original amount of a note; sometimes referred to as face amount of a note.

Promissory Note

A written and signed promise to pay a sum of money at a specified time.

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