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accounting planning,recording,analyzing, and interpreting financial information. 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 receivalbe ledger a subsidiary ledger containing only account for charge customers account title the name given to an account. Accounting Cyclye 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 records organized summaries of a business's financial activities. accounting system a planned process for providing accounting information that will be useful to management. accounts payable ledger a subsidiary ledger containing only account for vendors from whom merchandise or other items are purchase on account 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 the fiscal period. allowance method of recording losses from uncollectible accounts Crediting the estimated value of incollectible accounts to a contra accounts 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 balances sent to a depositor by bank Batch report A report of credit card sales produced by a point-of-sale terminal is called a batch report. Batching out The process of preparing a batch report of credit card sales from a poin-of-sale terminal called batching out. Blank Endorsment An endorsment consisting only of the endorser's signature board of directors a group of persons elected by the stockholders to manage a corporation book value the difference between an assets accounts balance and its related contra account balance. book value of accounts receivable the difference between the balance of Accounts Receivable and its contra accounts, Allowance for Uncollectible Accounts business ethics the use of ethics in making business decisions. capital the account used to summarized the owner's equity in a business. Capital stock total shares of ownership in a corporation. cash over a petty cash on hand amount more than the recorded amount cash discount a discount from an invoice given for early payment. 2% discount if you pay in 10, net 30 cash payments journal- a special journal used to rcord only cash (check) payment transactions Cash reciepts journal A special journal used to record only cash receipt transactions is called a cash receipts journal Cash Sales A sale in which cash is received for the total amount of sale at the time of the transaction. chart of accounts a list of accounts used by businesses 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 despositor Closing Entries journal entries used to prepare temporary accounts for a new fiscal period Code of Conduct A statementthat guides the ethical behavior of a company and its employees component percentage percentage relationship between one finnancial statement item and the total that includes that item. contra account an account that reduces a related account on a financial statement. Ex Owner's Equity-Drawing controlling account an account in a general ledger that summarizes all accounts in a subsidiary ledger Corporation an organization with the legal rightsof a person and which many persons may own 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 Original price of all merchandise sold during a fiscal period Credit An amount recorded on the right side Credit Card Sale A sale in which a credit card used for the total amount of the sale at the time of the transaction. Credit memoradum A form prepared by the vendor showing the amountdeducted for returns and allowances is called a credit memordaum Current Liabilities Liabilities due within a short time, usually within a year Currents Assets cash and other assets expected to be exchanged for cash or consumed within a year Customer A person/business to whom merchandise/services are sold. Debit An amount recorded on the left side Debit Card A bank card that atomatically deducts the amount of a purchases from the checking account of the cardholder declaring a dividend action by a board of directors to distribute corporate earnings to stockholders depreciation expense the portion of a plant asset's cost that is transferred to an expense accounts in each fiscal period during a plant assets useful life. Dishonored Check A check that a bank refuses to pay dividends earnings distributed to stockholders double-entry accounting The recording of debit and credit parts of a transaction 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 Endorsment 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 owne's equity resulting from the operation of a business. federal unemployment tax a federal tax used for state & federal administrative expenses of the unemployment program. It is 6.2% of the first $7,000 earned by each employee File Maintenance The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current Financial Ratio Comparison between two items of financial information financial statements financial reports that summarize the financial condition and operations of a business. Fiscal Period the length for time for which a business summarizes and reports financial information general journal A journal with two amount columns in which all kinds of entries can be recorded General Ledger A ledger that contains all accounts needed to prepare financial statements Gross Profit on Sales Revenue remaining after cost of merchandise sold has been deducted Income Statement a financial statement showing the revenue and expenses for a fiscal period. 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 Ledger A group of accounts liability an amount owed by a business. 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 Markup- the amount added to the cost of merchandise to establish the selling price. 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 goods on hand for sale to customers. Merchandising Business- a business that purchases and sells goods. Net Income the difference between total revenue and total expenses when total revnue is greater. Net Loss the difference between total revenue and total expenses when total expenses are 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 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 its assests. 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 payroll the total amount earned by all employees for a pay period payroll register a business formed used to record payroll information payroll taxes taxes based on the payroll of a business Permanent Accounts accounts used to accumulate information from one fiscal period to the next 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 assets asstes that will be used for a number of years in the operation of a bussiness Point of State A computer used to collect, store, and report all the info 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-earning ratio The relationship between the market value per share and earnings per share of a stock proprietorship a business owned by one person. Proving Cash Determining that the amount of cash agrees with the balance of the cash account in the accounting records Purchase on Account- a transaction in which the merchandise purchased is to be paid for later. Purchases on Journal- a special journal used to record only purchases of merchandise on account. Receipt A buisness form giving written acknowledgement for cash received Restrictive Endorsment An endorsment restricting further transfer of a check's ownership Retail Merchandising Business A Merchandising business that sells to those who use or consume the goods. retained earnings an amount earned by a corportation and not yet distributed to stockholders revenue an increase in an owner's equity resulting from the operation of a business. salary money paid for employee services sale on account a sale for which cash will be received at a later date. Sales allowance Credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decreased in the vendor's accounts rec. Sales discount A cash discount on sales taken by customer. Sales Invoice An invoice used as a source document for recording a sale on account Sales Journal A special used to record only sales of merchandise. Sales return Resulting in a decrease in the vendors accounts recieveable, is called a sales return Sales Tax A tax on a sale of merchandise/service. schedule of account payable a listing of vendor accounts, account balances, and total amount due all vendors schedule of account receivable a listing of customer accounts, account balances, and total amount due from all customers service business a business that performs an activity for a fee. Share of stock each unit of ownership in a corporation. social security tax a federal tax paid for old-age, survivors, and disability insurance source document A business paper from which information is obtain for a journal entry Special Endorsment An endorsment indicating a new owner of a check Special journal a journal used to record only one kind of transaction stakeholder any person or groups who will be affected by affected by an action state unemployment tax a state tax used to pay benefits to unemployeed workers Statement of stockholders equity A financial statement that shows changes in a coporations ownership Stockholder owner of one or more shares of a corporation. straight-line method of depreciation charging an equal amount of depreciation expense for a plant asset in each year subsidiary ledger a ledger that is summarized in a single general ledger account Supporting Schedule A report preapred to give details about an item on a principal financial statement T account An accounting device used to analyze transactions.. tax base the maximum amount of earnings on which a tax is calculated Temporary Accounts accounts used to accumulate information until it is transferred to the owner's capital account Terminal Summary The report that summarizes the cash and credit card sales of a point-of-sale terminal. total earnings the total pay due for a pay period before deductions transaction a business activity that changes assets, liabilities, or owner's equity. Trial Balance Trial balance: a proof of the equality of the debits and credits in a general ledger uncollectible accounts accounts receivable that cannot be collected Vendor- a business from which merchandise is purchased or supplies or other assets are bought. Wholesale Merchandising Business a business that buys and resells merchandise to retail merchandising businesses. withdrawals assets taken out of a business for the owner's personal use. withholding allowance a deduction from total earnings for each person legally supported by a tax payer Work Sheet Work sheet: a columnar accounting form used to summarize the general ledger information needed to prepare financial statements