Accounting Terms
W-4 Form
Employees' Withholding Allowance Certificate ..
F.U.T.A.
Federal Unemployment Tax Act.
employee's withholding allowance cettificate
Form W-4 is a(n):
N.S.F.
Not Sufficient Funds.
S.U.T.A.
State Unemployment Tax Act.
Salvage Value
The estimated value of a fixed asset at the end of its useful life.
U.C.F.
Uncollectible Funds
W-2 Form
Wage and Tax Statement; a report furnished by the employer for each employee indicating gross earnings and deductions for income and F.I.C.A. taxes.
Federal Unemployment Tax Act
a Federal act imposed upon each employer for the purpose of financing the administration costs of the Federal and the state unemployment compensation programs.
Federal Insurance Contributions Act
a Federal act which requires most employers and employees to pay taxes to support the Federal social security program.
Deposit Ticket/Deposit Slip
a bank form which lists those cash items (currency and coin) and individual checks to be deposited.
Ledger
a book of accounts.
Cash Receipts Journal
a book of original entries in which only cash receipts are recorded.
General Journal
a book of original entry in which business transactions are recorded in chronological order.
Cash payments journal
a book of original entry in which only cash disbursements are recorded.
Sales Journal
a book of original entry used for the recording of sales of merchandise on credit only.
Purchases Journal
a book of original entry used to record purchases of merchandise on credit only.
Combination Journal
a book of original entry which combines into one journal the features of the two-column general journal and a special journal.
Creditor
a business or individual to whom a debt is owed.
Postdated Check
a check dated subsequent to (following) its date of issuance.
Cashiers Check
a check drawn by a bank on its own funds and signed by an officer of the bank.
Bank Draft
a check drawn by one bank on another bank in which it has funds on deposit.
Dishonored Check
a check not paid by the bank when properly presented.
Certified Check
a check that carries the guarantee of the bank that sufficient funds are available to pay the check when it is presented.
Cancelled Check
a check that has been paid by the bank and returned to the drawer for recordkeeping.
In Balance
a condition in which the total of the debits and-the total of the credits are equal in an account.
Credit Balance
a condition that occurs when the total of the credits in an account is larger than the total of the debits in that account.
Debit Balance
a condition that occurs when the total of the debits in an account is larger than the total of the credits in that account.
Allowance for Doubtful Accounts (Allowance for Bad Debts)
a contra account utilized to accumulate totals against accounts receivable.
Expense
a decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenues.
Account
a device for recording the changes (increases or decreases) in the fundamental accounting elements.
Wage
a form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed.
Check Stub
a form on which information is recorded by the drawer of a check concerning the check drawn; a source document.
Petty Cash Voucher
a form used to reflect payments from the petty cash fund.
Purchase Requisition
a form used to request the responsible person or department to purchase merchandise or other property.
Balance Sheet (Statement of Financial Position; Statement of Financial Condition)
a formal financial statement illustrating the assets, liabilities, and owner's equity of a business as of a specific date.
Income Statement/Profit and Loss Statement/Statement of Operations/Operating Statement
a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period.
Statement of Owner's Equity/Statement of Net Worth
a formal financial statement which summarizes all of the changes in owner's equity during a specified period of time.
Budget
a formal written statement, which may be based upon adjusted historical data, of management's plans for the future expressed in financial terms,.
Petty Cash Fund
a fund of currency and coin established for the payment of small amounts of money.
Accounting
a language of business employed to communicate financial information based upon analyzing, recording, classification, summarization, reporting, and interpretation of financial data.
Chart of Accounts
a list of all the account titles and the account numbers assigned to them.
Mortgage Payable
a long-term liability; a written promise that pledges real property as security for payment of a debt.
Straight Line Depreciation
a method in which the depreciable cost basis (original cost basis less salvage value) of an asset is apportioned equally over its estimated useful life expressed in terms of months or years.
Banker's Method/360 Day Method
a method of computing interest based on the assumption that there are 360 days in a year.
Disbursement
a payment.
Fiscal Period
a period of time covered by an income statement.
Drawer
a person (depositor) who signs a check, ordering a payment to be made.
Payee
a person or company who will receive payment on a promissory note, check, draft or money order.
Endorser
a person or company whose name is written on the back of a check.
Drawee
a person or concern, usually a bank, that has been ordered to make a payment of a check or draft.
Check
a piece of commercial paper drawn on funds in a bank account and payable on demand.
Cross Referencing
a process of entering the journal page number in the ledger and the ledger account number in the journal.
Double Entry Accounting/Double Entry Bookkeeping
a process of recording equal debits and credits for a single business transaction.
Proving the Journal
a process which examines each page of a journal, confirming that the debit entries equal the credit entries on each page.
Statement of Account
a report sent to each customer, usually at the end of the month, which indicates the status of their account.
Drawing Account/Owner Withdrawal
a separate owner's equity account in which withdrawals of cash or other assets by the owner for personal use are recorded.
T Account
a skeleton form of an account used for instructional purposes.
Purchase Invoice
a source document prepared by the seller listing the items shipped, their cost and the method of shipment (from the buyer's viewpoint).
Sales Invoice
a source document prepared by the seller that lists the items shipped, their cost and the method of shipment (from the seller's viewpoint).
Invoice
a source document showing quantity, description, prices of items, total amount of purchase and the terms of payment.
Invoice
a source document showing quantity, description, prices of items, total amount of purchase and the terms of payment. ·
Credit Memorandum
a source document that grants credit to a buyer for purchase return or purchase allowance.
Special Journal
a special journal designed to accumulate data about only one kind of business transaction.
Cash Short and Over
a special ledger account that is used to keep track of unexplained shortages or overages of cash.
Discount Period
a specific number of days during which a discount is available if the account is paid.
Retail Sales Tax
a tax imposed on tangible personal property sold at retail
Income Tax
a tax levied on the earnings of individuals and businesses by Federal, state, and local governments.
Purchases
a temporary owner's equity account used to record the buying of merchandise for resale.
Sales
a temporary owner's equity account used to record the earning of revenue.
Sales Returns and Allowances
a temporary owner's equity contra account used to record credit given to a customer for shortages or damaged goods.
Sales Discount
a temporary owner's equity contra account used to record discounts given to customers as an incentive for prompt payment.
Purchases Discount
a temporary owner's equity contra account used to record discounts taken on inventory purchases; the amount of any discounts granted by suppliers to encourage prompt payment of their invoices.
Purchases Returns and Allowances
a temporary owner's equity contra account utilized to record the return of merchandise to the manufacturer or supplier as the result of material defects in workmanship and/or inferior product quality.
Quarterly
a three-month period.
Footing/Pencil Footing
a total, written in small pencil figures, under the last entry in a column of an account.
Adjusted Trial Balance
a trial balance taken after adjusting entries have been recorded.
Calendar Year
a twelve-month period beginning January 151 and concluding on December 31st.
Supplies
a type of asset that will be consumed as it is used. (Examples: embalming supplies and office supplies)
Post-Closing Trial Balance
a work paper prepared after all the owner's temporary equity accounts have been closed and all permanent accounts have been balanced and ruled, proving the equality of the debits and credits.
Trial Balance
a work paper proving the equality of the debit and credit balances in the ledger.
Purchase Order
a written order by a buyer for merchandise or other property specified in the purchase requisition.
Promissory Note
a written promise made by a person or business to pay a certain sum of money to another person or business at a specified time in the future.
Note Receivable
a written promise of a customer to pay the business a sum of money at a future date.
Note Payable
a written promise to pay a creditor a certain amount in the future.
the computer part that performs all the controlling, calcualting, and processing functions is the a.CPU b.CAD c.ROM d.RAD
a. CPU
the process of determining whether the amount of cash both on hand and in the bank, is the same as enountentered in the accounting records is called proving a.the cash b.disbursements c.the bank system d.statement of payments
a. the cash
the terms hard and floppy describe the types of a.disks b.software c.hardware d.printouts
a.disks
what is the PRIMARY function of word processing software? a.producing written documents b.producing graphic presentations c.listing, calculating and sorting data d.storing info in a data file cabinet
a.producing written documents
F.I.C.A.
abbreviation for Federal Insurance Contributions Act.
Bad Debts Expense/Uncollectible Accounts Expense/Loss from Uncollectible Accounts
accounts receivable that are uneollectible.
Temporary Owner's Equity Accounts
accounts utilized to accumulate income, expenses and owner's withdrawals for one accounting period only.
Contra Account
an account designed to accumulate totals to offset a related account.
Compound Journal Entry
an accounting entry that involves more than two accounts.
Cash Basis Accounting
an accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid.
Transposition Error
an amount written with the digits in incorrect order.
Restrictive Endorsement
an endorsement that limits the use of funds to the purpose stated. (Example: "For Deposit Only")
Worksheet
an expanded trial balance utilized for computing, classifying, and sorting account balances before preparing the formal financial statements.
Accrued Expense
an expense incurred in operating a business during an accounting period but not yet paid.
Certified Public Accountant/C.P.A.
an individual possessing a college education, having practical experience in accounting and who has passed a comprehensive state examination in order to be certified to practice public accounting in that state.
Maker
an individual who promises to pay on a promissory note; an individual who signs a promissory note.
Income/Revenue
an inflow of assets as a result of selling a product or providing a service.
Bank Statement
an itemized listing prepared by the bank of additions to and subtractions from 'a depositor's account.
Stop Payment Order
an order by a depositor requesting a bank not to pay on a check previously issued.
Account Receivable
an unwritten promise by a customer to pay at a later date for goods sold or services rendered.
Account Payable
an unwritten promise to pay creditors for property such as merchandise, supplies or equipment purchased on credit, or for services received on credit.
Transaction
any activity of a business enterprise that involves the exchange of values.
Liabilities
any debts that a business owes.
Independent Contractor
any person who agrees to perform a service for a fee and who is not subject to the control of those for whom the service is performed.
the basic accounting equasion is: a.assets= liabilites+capital b.assets+liabilites=capital c.asstes=liabilities-capital d.liabilities=capital-assets
asset=liabilities=capital
Accounting Equation
assets equal liabilities plus owner's equity.
the accounting expression "3/15, n/30" means a: a.15% discount if paid in 3 days with full payment due by the 30th of the month b.3% discount is paid in 15 days, with full payment due 30 days from the date of invoice c.3% dicount if paid in 15 days with full payment due by the end of the month d.15% discount if paid in 3 days with full payment due 30 days from the date of invoice
b. 3% discount if paid in 15 days with full payment due 30 days from date of invoice
anything of value owned is considered a/an a. income b. asset c. expense d.liability
b. asset
if the operator does not assign values in computer operations,the computer automatically can assign a.delimit values b.default values c.terminal values d.new data values
b.default values
money paid for the use of money is called a.income b.intrest c.notes payment d.promissory note
b.intrest
the legal obligated of a business to pay a debt is called a(an) a. asset b.liability c.owners equality d.business entirety
b.liability
Summarizing
bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements.
A trial balance of the general ledger accounts taken after the owner's temporary equality accounts have been closed is referred to as: a. Pre-closing trial balance b. subsidiary trial balance c. post-closing trial balance d. new account period
c. post-closing trial balance
The steps involoved in handling all of the transacions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are reffered to collectively as: a.accounting b.input accounting c.accounting cycle d.output accounting
c.accounting cycle
a duplicate of an original program or data made as a precaution against loss or damage of the original is called a.ROM b.output device c.backup d.RAM
c.backup
when a net profit is closed to capital, the capital account is a.opened b.debited c.credited d.unaffected
c.credited
which of the following accounts normally has a credit balance a.asset b.expense c.liability d.prepaid expense
c.liability
Current Assets
cash or other assets that will be converted into cash or consumed within one year.
Quick Assets
cash, marketable securities, accounts, and notes receivable.
Outstanding Checks
checks that have been drawn and subtracted from the depositor's checkbook, but which have not yet been presented to the bank for payment.
Cash
coins, currency (paper money), checks, credit card receipts, and money orders received from others, as well as money deposited in the bank.
Current Asset Ratio
current assets divided by current liabilities.
Current Ratio
current assets divided by current liabilities.
what is the interest on a 1,000 note for one month at an 8% annual rate a.5.67 b.5.95 c.6.33 d.6.67
d. 6.67
the process of allocating the cost of plant and equiptment to the periods expected to benefit from the use of these assets is called a.asset accounting b.expense accounting c.matching accounting d.depreciation accounting
d. depreaciation accounting
a funeral home has 90,000 of accounts receivable, 50,000 of that is current, 10,000 is in the 30-60 day column and 20,000 is in the 60-90 day column and 10,000 is over 90 days. What percent of the accounts resecviable is past due date a. 25% b.30% c.33% d.44%
d.44%
96 megabytes would be roughly equlaivent to a.9,600 characters b.96,000 characters c.96 billion characters d.96 million characters
d.96 million characters
a circut board that contains most of the electronic componets of the system unit is called the a.RAM b.ROM c.hard drive d.mother board
d.mother board
Current Liabilities
debts of a business that are generally paid within one year.
Deposits in Transit
deposits that have been made and added to depositor's checkbook, but which have not yet been listed on the bank statement.
Analyzing
determining the fundamental significance of business transactions so that financial information may be properly processed.
Cash Discounts
discounts from quoted prices as an inducement for prompt payment of invoices.
E.O.M.
end of month.
Adjusting Entries
entries made at the conclusion of a fiscal period to bring accounts up to date.
Closing Entries
entries made at the end of each reporting period to transfer the balances of the temporary owner's equity accounts to the permanent owner's equity account and to reduce the balance in the temporary owner's equity accounts to zero in preparation for the next accounting period.
Operating Expenses/Overhead
expenses incurred in the normal operation of a business.
Other Expenses
expenses incurred that are not the direct result of regular trading activities of a business.
Interpreting
explaining the significant events or developments that occur, usually taking the form of analysis and comparisons.
Income Statement Common-Size Statements/Percentage Method
express the major items in the Income Statement as a percent of Net Sales and compare with previous fiscal periods.
Balance sheet common-size statements/percentage method
express the major items in the balance sheet as a percent of the total assets and compare with previous fiscal Periods.
Salary
generally considered to be compensation for managerial or administrative services, expressed in terms of a month or year.
Inventory (merchandise)
goods purchased for resale at a profit.
Merchandise/Inventory
goods purchased for resale at a profit.
Net Pay/Net Earnings
gross pay less payroll deductions; employees' take-home pay.
Gross Profit Percentage
gross profit divided by net sales.
Chronological
in accounting, to record in order of time.
Accrued Income
income actually earned during an accounting period.but which will not be received until a future period.
Gross Earnings/Gross Pay
income before any deductions have been made.
Other Income
income received that is not the direct result of regular trading activities of a business.
Prepaid Expenses
items that are considered to be assets when acquired, but which will become expenses when consumed or expired.
Debit Memorandum
items the bank deducts from the account balance.
Fixed Ltabilities/Long Term Liabilities
liabilities that are not due and payable within one year.
Activity Analysis
measures how efficiently a firm is utilizing its assets.
Accounts Receivable Turnover
measures how many times per year receivables are collected.
Liquidity Analysis
measures the ability of the firm to meet its current obligations.
Age of Accounts Receivable
measures the average time required to collect receivables. Calculation: 365 days divided by Accounts Receivable Turnover.
Age of Inventory
measures the average time required to sell inventory. Calculation: 365 days divided by Inventory Turnover
Cash Payments/Cash Disbursements
money and money substitutes paid.
Interest
money paid for the use of money.
Calculation
net credit sales divided by Average Accounts Receivable Average Accounts Receivable (Beginning Accounts Receivable- Ending Accounts Receivable) divided by 2.
Profit Margin
net income divided by net sales.
Gross Profit/Gross Margin
net sales minus the cost of goods sold.
Source Document/Business Paper
the first record of a business transaction (examples include check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.).
Business Papers (source documents)
the first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc.
Blank Endorsement
the handwritten signature of the payee on the back of the check.
Overdraft
the issuance of a check without sufficient funds in the account when it is presented for payment.
Debit
the left side of a standard account.
Depreciation
the loss in value of a fixed asset due to wear and tear and the passage of time; or a method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life.
Inventory Turnover
the number of times the average inventory has been sold or used up (turned over) during a period. Calculation: 365/Cost of Goods Sold for Period/ Average Inventory. Note: Average Inventory= (Beginning Inventory + Ending Inventory) divided by2.
Time/Term of Note
the period of time from the date of the note to the maturity date.
Face of Note
the principal sum the maker of a note promises to pay.
Bank Statement Reconciliation
the process by which the depositor verifies agreement between his checkbook balance and the bank statement balance.
Accounting Cycle
the process involved in journalizing, posting to the ledger, taking a trial balance, preparing statements, making adjusting and closing entries, and preparing a post closing trial balance, which is repeated each fiscal period.
Final Processing/Reporting
the process of communicating the results achieved during an accounting period to others.
Proving Cash
the process of determining whether the amount of cash, both on hand and in the bank, is the same as that which is indicated in the accounting records.
Journalizing
the process of recording business transactions in a journal.
Bookkeeping
the recording of financial information in a prescribed manner.
Credit
the right side of a standard account.
Endorsement (Indorsement)
the signature of the payee or other holder placed on the back of a check or other negotiable instrument.
Classifying
the sorting of the many business transactions in an orderly and systematic manner.
Tangible Assets
those assets that can be appraised by value or seen or touched.
Net Income/Net Profit
the difference between gross profit and expenses when gross profit is larger.
Account Balance
the difference between the total debits and the total credits in an account.
Transaction Analysis
the effect of transactions on the accounting elements.
Useful Life
the estimated life of a fixed asset.
Principal
the face value of a promissory note upon which interest is computed.
Federal Income Tax Withholding
the amount that an employer must withhold from an employee's-pay for income tax purposes.
Rate
the annual percentage rate used to compute interest.
General Ledger
the book of accounts.
Debtor
the business or individual who owes a debt.
Data Entry (recording)
the committing of a business transaction and the events surrounding such into writing.
Recording/Data Entry
the committing of a business transaction and the events surrounding such into writing. ·
Book Value!Undepreciated Cost
the cost of a fixed asset less its accumulated depreciation.
Maturity Date
the date on which payment is due on a promissory note.
Posting
'the transferal of data from the journal to the ledger.
Original Cost Basis
the amount originally paid for a depreciable asset.
Net Loss
the difference between gross profit and expenses when expenses are larger.
Accountant
one who is concerned with the design of the system of records, the preparation ofreports based upon the recorded data, and the interpretation of the reports.
Bookkeeper/Information Processor
one who is involved in the process of recording financial information in a prescribed manner.
Employee
one who is under the control and direction of an employer with regard to the performance of employment.
Fixed Assets/Long Term Assets
property of a relatively permanent nature used in the operation of a business and not intended for resale.
Assets
property of monetary value owned by a business.
Profitability Analysis
provides evidence concerning the earnings potential of a company and how effectively the firm is being managed.
Net Purchases
purchases minus purchase returns and allowances minus purchase discounts.
Acid Test Ratio/Quick Ratio
quick assets divided by current liabilities.
Balance sheet comparative forms
record the balance sheet data for two or more comparable periods on the same form so that the information can be readily compared.
Income Statement Comparative Forms
record the income statement data for two or more Comparable periods of the same form so that the information can be readily compared.
Accrual Accounting
recording in each fiscal period applicable expenses, whether paid or not, and income earned. ·
Net Sales
sales minus sales returns and allowances minus sales discount.
Quick Ratio
see Acid Test Ratio
Loss from Uncollectible Accounts
see Bad Debts Expense
Uncollectible Accounts Expense
see Bad Debts Expense ·
Statement of Financial Condition/Statement of Financial Position
see Balance Sheet.
Undepreciated cost
see Book Value
Proprietorship
see Capital
Net Worth
see Capital .
Owner Withdrawals
see Drawing Account
Reporting
see Final Processing
Long-term Assets
see Fixed Assets
Long-term Liabilities
see Fixed Liabilities
Pencil footing
see Footing
Journal
see General Journal.
Revenue
see Income
Profit and Loss Statement
see Income Statement
Statement of Operations
see Income Statement
Operating Statement
see Income statement
Overhead
see Operating Expenses
Intangible Assets
that cannot be touched or grasped (examples include patents, copyrights and goodwill).
Depreciation Expense
that portion of the original cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from its use.
CR
the abbreviation for credit.
Dr.
the abbreviation for debit
Capital (net worth; owner's equity; proprietorship)
the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business.
Owner's Equity/Net Worth/Capital/Proprietorship
the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business.
Take Home Pay/Net Pay
the amount of pay after deductions (income taxes, F.I.C.A. taxes, etc.) have been subtracted.
