Accounting Word Bank

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Source Document

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

Retail Merchandising Business

A business that sells to those who use or consume the goods

Outstanding Check

A check issued by a company and recorded on its books but not yet paid by its bank.

Cancelled Check

A check that has been paid by the bank.

Bounced Check

A check that is written for more than the amount of money in a checking account.

Postdated Check

A check with a future date

Automated Teller Machine

A computer terminal that allows a withdrawal of cash from an account, ATM

Worksheet

A computerized spreadsheet

Expense

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

Social Security Tax

A federal tax that supports elderly, disabled, or orphaned citizens.

Commission

A fee that a salesperson receives upon completion of a sale

Balance Sheet

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

Invoice

A form describing the goods or services sold, the quantity, the price, and the terms of sale

Memorandum

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

Chart of Accounts

A list of accounts used by a business

General Ledger

A permanent record organized by account number.

Check Register

A personal record book used to keep track of all transactions.

Time Card

A record of the times an employee arrives at work and leaves each day.

Vendor

A seller of goods

Receipt

A source document that serves as a record of cash received.

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

Sales Journal

A special journal used to record sales of merchandise on credit.

Purchases Journal

A special journal used to record the purchase of goods on credit.

Double Entry Accounting

A system where every transaction affects at least two accounts

Reconciliation

A way to balance your account records with your bank or credit union.

Check

A written order for a bank to pay money

Net Income

Also called profit. Calculated as the Revenue minus Expenses

Accounts Receivable

Amounts due from customers for credit sales

Petty Cash

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

Liability

An amount owed by a business

Special Endorsement

An endorsement that transfers the right to cash the check to someone else.

Asset

Anything of value that is owned

Liquidity

Availability of resources to meet short-term cash requirements.

Permanent Accounts

Balance sheet accounts whose balances are carried forward to the next accounting period.

Wholesale Merchandising Business

Buys and resells merchandise primarily to other merchandising businesses

Normal Balance

The balance that appears on the increase side of an account.

Double Line

The bottom line in accounting is the double-underlined final figure at the bottom of a column indicating a total profit or loss.

Equity

The difference between assets and liabilities

W4 form

The form that determines the percentage of an employee's pay that will be withheld for federal taxes

Credit

The granting of a loan and the creation of debt; any form of deferred payment

Debit

The left side of an account

Single Line

The line under the subtotal

Posting

The procedure of transferring journal entry amounts to the ledger accounts.

Accounting

The process of keeping and interpreting financial records

Journalizing

The process of recording business transactions in a journal.

Capital

wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing

Drawing

Debit

Proving Cash

Determining that the amount of cash agrees with the accounting records

Salaried Employees

Employees paid on a yearly basis, not hourly

Component Percentage

Expresses each item on a particular financial statement as a percentage of a single base amount.

Revenue

Income

Current Assets

Items that can or will be converted into cash within one year.

Adjusting Entries

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

Closing Entries

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

1,000.00

One thousand

Bank Check

Paper form of payment used to pay a stated amount of money to the bearer or named party.

Restrictive Endorsement

Restricts or limits the use of a check.

Calculator Tape

Source document for daily sales

Heading

Tells the reader what the section is about

Markup

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

Owner's Equity

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

Net loss

When expenses are greater than income

Medicare Tax

a federal tax paid for hospital insurance

Fiscal Period

a period of time covered by an income statement

Money Order

a written order for the payment of a sum to a named individual

temporary Accounts

accounts that are closed at the end of every accounting period. These accounts include revenue, expense, and withdrawal accounts.

Income Statement

financial statement which reports net income or net loss of a company

Blank Endorsement

having no words other than the signature of the endorser

Witholding Allowance

he more allowances claimed, the less income tax will be withheld from a paycheck. The fewer allowances you claim, the more income tax will be withheld from each paycheck.

W2 form

states how much income was earned and how much tax was withheld

Net Pay

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


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