Arkansas Accounting II Terms

176 terms by jones72802

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Accountant

a person who handles a broad range of jobs related to the making of choices and decisions about the design for a business accounting system and the preparation and explanation of financial reports

Accounting

planning, recording, analyzing, and interpreting financial activities

Accounting clerk

entry-level job that can vary with the size of the company from specialization in one part of the system to a wide range of recordkeeping tasks

Accounting equation

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

Accounts payable

the amount of money owed, or payable, to the creditors of a business

Accounts receivable

the total amount of money owed to a business

Accounts receivable turnover ratio

the number of times the average amount of accounts receivable is collected during a specified period

Accrued expenses

expenses incurred in one fiscal period but not paid until a later fiscal period

Accrued revenue

revenue earned in one fiscal period but not received until a later fiscal period

Accumulated earnings

the employee's year-to-date gross earnings or the employee's gross earnings from the beginning of the year through the end of each pay period

Adjusting entry

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

Adjustments

an amount that is added to or subtracted from an account balance to bring the balance up to date

Aging accounts receivable

analyzing accounts receivable according to when they are due

Allowance

reduces the amount of income tax to be withheld

Assessed value

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

Asset

anything of value that is owned

Average number of days' sales in merchandise inventory

the period of time needed to sell an average amount of merchandise inventory

Balance sheet

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

Beginning inventory

the merchandise a business has on hand at the beginning of a fiscal period

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

Bookkeeper

a person who keeps regular, concise, accurate records of business transactions by entering them in account books

Capital

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

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

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

Chronological

arranged in or according to the order of time

Closing entry

journal entries used to prepare temporary accounts for a new fiscal period

Commission

an amount paid to an employee based on a percentage of the employee's sales

Consignee

the person or business who receives goods on consignment

Consignment

goods that are given to a business to sell but for which title to the goods remains with the vendor

Consignor

the person or business who gives goods on consignment

Contra account

an account whose balance decreases another account's balance

Corporation

an organization with the legal rights of a person and which may be owned by many people

Cost of merchandise

the price a business pays for goods it purchases to sell

Declining-balance method of depreciation

multiplying the book value at the end of each fiscal period by a constant depreciation rate (based on the straight-line rate—usually twice the straight-line rate; an asset with an estimated useful life of 5 years would have a depreciation rate of 40%)

Deduction

an amount that is subtracted from an employee's gross earnings

Depletion

the decrease in the value of a plant asset because of the removal of a natural resource (gas, oil, coal, trees, gravel, minerals)

Depreciation

a systematic procedure for allocating the cost of a plant asset to the accounting periods in which the firm receives service from that asset

Direct deposit

the depositing of an employee's net pay directly into his/her personal bank account; usually made through electronic funds transfer

Direct write-off method of recording losses from uncollectible accounts

recording uncollectible accounts expenses only when an amount is actually known to be uncollectible

Dishonored note

a note that is not paid when due

Double-entry accounting

the recording of debit and credit parts of a transaction

Drawing

an account showing the total assets taken out of the business by the owner

Employee earnings record

a business form used to record details affecting payments made to an employee

Ending inventory

the merchandise a business has on hand at the end of a fiscal period

Entry-level jobs

the first jobs that individuals get

Equity

financial rights to the assets of a business

Ethical

conforming to accepted and established professional standards of conduct

Expense

a decrease in owner's equity resulting from the operations of a business

Fair market value

the estimated price at which an asset or service would pass from a willing seller to a willing buyer

Financial statement

a report prepared to summarize the changes resulting from business transactions that occur during an accounting period

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

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

General office clerk

may be in charge of a small cash fund, file accounting records, type accounting reports

Gross earnings

the total pay due for a pay period before deductions

Gross profit on sales

the revenue remaining after cost of merchandise sold has been deducted

Historical costs

all costs incurred by a business to operate, maintain, repair, replace, or construct

Income

a gain measured in money that derives from capital or labor; also the amount of such gain received by an individual in a given period of time

Income statement

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

Interest

an amount paid for the use of money for a period of time

Interest expense

the interest accrued on money borrowed

Interest rate of a note

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

Inventory

the amount of goods on hand

Inventory record

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

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

Liability

an amount owed by a business

Lower of cost or market inventory costing method

using the lower of cost or market price to calculate the cost of ending merchandise inventory

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

Memorandum

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

Merchandise

goods that a merchandising business purchases to sell

Merchandise inventory turnover ratio

the number of times the average amount of merchandise inventory is sold during a specific period of time

Net 30

a form of trade credit which specifies payment is expected to be received in full 30 days after the goods are delivered [2/10, n/30—a 2% discount may be taken if the bill can be paid within 10 days; if you don't take the discount, the full amount (the "net" amount) is due within 30 days]

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

Net pay

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

Net purchases

total purchases less purchases discount and purchases returns and allowances

Net sales

total sales less sales discount and sales returns and allowances

Notes payable

promissory notes that a business issues to creditors

Notes receivable

promissory notes that a business accepts from customers

Operating expenses

the cash spent or assets consumed to earn revenue for a business; operating expenses do not include federal income tax

Operating income

the taxable income of a corporation

Overtime rate

employers are required to pay overtime when employees covered by these laws work more than 40 hours per week; the most common rate is 1.5 times the regular pay rate

Partnership

a business in which two or more people combine their assets and skills

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 form used to record payroll information

Personal property

all property not classified as real property

Petty cash

an amount of cash kept on hand and used for making small payments

Plant asset record

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

Post-closing trial balance

a trial balance prepared after the closing entries are posted

Posting

transferring information from a journal entry to a ledger account

Prepaid expenses

expenses paid in one fiscal period but not reported as expenses until a later fiscal period

Principal of a note

the original amount of a note

Production-unit method of depreciation

calculating estimated annual depreciation expenses based on the amount of production expected from a plant asset (example: depreciation on a company vehicle based on number of miles driven per year)

Promissory note

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

Proprietorship

a business owned by one person

Proving

determining that amounts are in agreement or in balance

Proving cash

determining that the amount of cash agrees with the accounting records

Public accounting firm

a business selling accounting services to the general public

Purchase

to gain possession by paying money or the equivalent

Purchase order

a completed form authorizing a seller to deliver goods with payment to be made later

Purchases journal

a special journal used to record only purchases of merchandise on account

Real property

land and anything attached to the land

Receipt

a business form giving written acknowledgment for cash received

Reconciling

verifying that information on a bank statement and a checkbook are in agreement

Retail method of estimating inventory

estimating inventory by using a percentage based on both cost and retail prices

Revenue

an increase in owner's equity resulting from the operation of a business

Reversing entry

an entry made at the beginning of one fiscal period to reverse an adjusting entry made in the previous fiscal period

Salary

the money paid for employee services

Sales journal

a special journal used to record only sales of merchandise on account

Shrinkage

the amount or percentage of profit lost to shoplifting, employee theft, and paperwork error

Source document

a business paper from which information is obtained for a journal entry

Special amount column

a journal amount column headed with an account title

Spoilage

material or the amount of material that is spoiled or wasted

Statement of retained earnings

a statement that reports the changes that have taken place in the retained earnings account during the fiscal period; prepared as a supporting document for the balance sheet

Stock ledger

a file of stock records for all merchandise on hand

Stock record

a form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand

Straight-line method of depreciation

charging an equal amount of depreciation expense for a plant asset in each year of useful life

Subsidiary ledger

a ledger that is summarized in a single general ledger account

Sum-of-the-years' digits method of depreciation

using fractions based on years of a plant asset's useful life

Transaction

a business activity that changes assets, liabilities, or owner's equity

Trial balance

a proof of the equality of debits and credits in a general ledger

Uncollectible accounts

accounts receivable that cannot be collected

Unearned revenue

revenue received in one fiscal period but not earned until the next fiscal period

Vendor

a business from which merchandise is purchased or supplies or other assets are bought

Wages

an amount of money paid to an employee at a specified rate per hour worked

Weighted-average inventory costing method

using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold

Withdrawal

assets taken out of a business for the owner's personal use

Work sheet

a columnar accounting form used to summarize the general ledger information needed to prepare financial statements

Writing off an account

canceling the balance of a customer account because the customer does not pay

Additional paid-in-capital

capital received from investors in exchange for stock

Amortization

to write off a portion of a bond discount or premium over the life of the bond issue

Articles of incorporation

an application to organize a business as a corporation made to appropriate state officials

Board of directors

a group of individuals, elected by stockholders, who govern and are responsible for the affairs of the corporation

Bond

a long-term liability in which the corporation promises to repay a certain amount at a specified date and to pay interest at set time

Bond issue

the total amount of bonds issued at the same time

Bond sinking fund

a special fund used to pay off a bond issue when it comes due

Charter

the approved articles of incorporation

Common stock

a title given to stock when only one class is issued by the corporation

Corporation

an artificial legal entity that has rights and responsibilities of its own

Date of declaration

date on which a board of directors authorizes a dividend

Date of payment

date on which a dividend is actually paid

Date of record

one to two weeks after date of declaration; stockholders owning stock on this date will receive a declared dividend

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