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209 terms

Vocabulary Ch 1-22

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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.
Proprietorship
A business owned by one person.
Proving Cash
Determining that the amount of cash agrees with the accounting records.
Purchase Invoice
An invoice used as a source document for recording a purchase on account transaction.
Purchase on Account
A transaction in which the merchandise purchased is to be paid for later.
Purchases Allowance
Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable.
Purchases Discount
A cash discount on purchases taken by a customer.
Purchases Journal
A special journal used to record only purchases of merchandise on account.
Purchases Return
Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable.
Real Property
Land and anything attached to the land.
Receipt
A business form giving written acknowledgement for cash received.
Restrictive Endorsement
An endorsement 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 corporation and not yet distributed to stockholders.
Revenue
An increase in owner's equity resulting from the operation of a business.
Reversing Entry
An entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period.
Salary
The 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 decrease in the vendor's accounts receivable.
Sales Discount
A cash discount on sales taken by a customer.
Sales Invoice
An invoice used as a source document for recording a sale on account.
Sales Journal
A special journal used to record only sales of merchandise on account.
Sales Return
Credit allowed a customer for the sale price of returned merchandise, resulting in a decrease in the vendor's accounts receivable.
Sales Tax
A tax on a sale of merchandise or services.
Schedule of Accounts Payable
A listing of vendor accounts, account balances, and total amount due all vendors.
Schedule of Accounts 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 obtained for a journal entry.
Special Account Column
A journal amount column headed with an account title.
Special Endorsement
An endorsement indicating a new owner of a check.
Special Journal
A journal used to record only one kind of transaction.
Stakeholders
Any persons or groups who will be affected by an action.
State Unemployment Tax
A state tax used to pay benefits to unemployed workers.
Statement of Stockholder's Equity
A financial statement that shows changes in a corporation's ownership for a fiscal period.
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.
Stockholder
An 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 of useful life.
Subsidary Ledger
A ledger that is summarized in a single general ledger account.
Supporting Schedule
A report prepared 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 t o the owner's capital account.
Terminal Summary
The report that summarizes the cash and credit card sales of a point-of-sale terminal.
Terms of Sale
An agreement between a buyer and a seller about payment for merchandise.
Time of a Note
The days, months, or years from the date of signing until a note is to be paid.
Total Earnings
The total pay due for a pay period before deductions.
Trade Discount
A reduction in the list price granted to customers.
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.
Vendor
A business from which merchandise is purchased or supplies or other assets are bought.
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.
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 taxpayer, including the employee.
Work Sheet
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
Working Capital
The amount of total current assets less total current liabilities.
Writing off an Account
Canceling the balance of a customer account because the customer does not pay.