Survey of Accounting Final PCC Miss Whipple

Statement of owner's equity

A financial statement that reveals the change in capital. The ending figure for capital is then placed on the balance sheet.

Deposit slip

A form provided by a bank for use in depositing money or checks into a checking account.

Signature card

A form signed by a bank customer that the bank uses to verify signature authenticity on all checks.

Standard account

A formal account that includes columns for date, explanation, posting reference, debit, and credit.

International Financial Reporting Standards (IFRS)

A group of accounting standards and procedures that if adopted by the US, could replace GAAP.

Ledger

A group of accounts that records data from business transactions.

Trial balance

A list of the ending balances of all the accounts in a ledger. The total of the debits should equal the total of the credits.

Chart of accounts

A numbering system of accounts that lists the account titles and account numbers to be used by a company.

Endorsement

Blank: could be further endorsed. Full: restricts further endorsement to only the person or company named. Restrictive: Restricts ant further endorsement.

manufacturer

Business that makes a product and sells it to its customers.

Merchandise company

Business that makes its own products or buys a product from a manufacturing company to sell to its customers.

NSF (non-sufficient funds)

Notation indicating that a check has been written on an account that lacks sufficient funds to back it up.

Supplies

One type of asset acquired by a firm; it has a much shorter life than equipment.

Check Truncation

Procedure whereby checks are not returned to the drawer with the bank statement but are instead kept at the bank for a certain amount of time before being first transferred to microfilm and then destroyed

Internal control system

Procedures and methods to control a firm's assets as well as monitor its operations.

Journalizing

Process of recording transactions in a journal.

Assets

Properties (resources) of value owned by a business (cash, supplies, equipment, land).

Accrued salaries payable

Salaries that are earned by employees but unpaid and unrecorded during the period (and thus need to be recorded by an adjustment) and will not come due for payment until the next accounting period.

Creditor

Someone who has a claim to assets.

Transposition

The accidental rearrangement of digits of a number.

cash short and over

The account that records cash shortages and overages. If the ending balance is a debit, it is recorded on the income statement as a miscellaneous expense; if it is a credit, it is recorded as miscellaneous income.

Historical cost

The actual cost of an asset at time of purchase.

Ending Balance

The difference between footings in a T account.

Capital

The owner's investment of equity in the company

accounting period

The period of time for which an income statement is prepared.

Payee

The person or company to whom the check is payable

Drawer

The person who writes a check.

Generally Accepted Accounting Principles (GAAP)

The procedures and guidelines that must be followed during the accounting process.

Adjusting

The process of calculating the latest up-to-date balance of each account at the end of an accounting period.

bank reconciliation

The process of reconciling the checkbook balance with the bank balance given on the bank statement.

Bookkeeping

The recording function of the accounting process.

Equities

The rights or financial claims of creditors (liabilities) and owners (owner's equity) who supply the assets to a firm.

Normal balance of an account

The side of an account that increases by the rules of debit and credit.

footings

The totals of each side of a T account

Journal entry

The transaction (debits and credits) that is recorded into a journal once it is analyzed.

Posting

The transferring, copying, or recording of information from a journal to a ledger.

Net loss

When expenses total more than revenue, the result is net loss.

Partnership

a business owned by two or more people

Service company

a business that provides a service

canceled check

a check that has been processed by the bank

Limited Liability Company (LLC)

type of business organization that is owned by a few members. Members are only liable for the corporations debts

Net Income

when revenue is greater than expenses

Accumulated Depreciation

A contra-asset account that summarizes or accumulates the amount of depreciation that has been taken on an asset.

Sole Proprietorship

A business owned by one person

Corporation

A business owned by stockholders who share in its profits but are not personally responsible for its debts

Petty cash voucher

A petty cash form to be completed when money is taken out of petty cash.

Shift in assets

A shift that occurs when the composition of the assets has changed but the total of the assets remains the same.

T account

A skeleton version of a standard account, used for demonstration purposes.

Withdrawals

A subdivision of owner's equity that records money or other assets an owner withdraws from a business for personal use.

Auxiliary petty cash record

A supplementary record for summarizing petty cash information.

compound entry

A transaction involving more than one debit or credit.

Income Statement

Accounting statement that details the performances of a firm (revenue minus expenses) for a specific period of time

Cash basis

Accounting system that records revenue when cash is received and expenses when paid. This system does not match revenues and expenses like in the accrual basis of accounting.

temporary (nominal) accounts

Accounts whose balances are transferred to the capital account at the end of the fiscal period and start with a zero balance each financial period. Includes revenue, expense, owner's drawing account, and the income summary account

permanent (real) accounts

Accounts whose balances carry on from one financial period to another. Includes assets, liabilities, and capital account

Cross-referencing

Adding to the PR column of the journal the account number of the ledger account that was updated from the journal.

Accounts Payable

Amounts to be paid in the future for goods or services already acquired

Accounts receivable

Asset that indicates amounts owed by customers

Expanded accounting equation

Assets = Liabilities + Capital - Withdrawals + Revenue - Expenses

Basic Accounting Equation

Assets = Liabilities + Owner's Equity

Drawee

Bank that drawer has an account with

Outstanding Checks

Checks written by a company or person that were not received or not processed by the bank before the preparation of the bank statement.

Expenses

Cost incurred in running a business by consuming goods or services in producing revenue. Subdivision of owner's equity.

Book value

Cost of equipment less accumulated depreciation.

Deposits in transit

Deposits that were made by customers of a bank but did not reach, or were not processed by, the bank before the preparation of the bank statement.

Electronic Funds Transfer (EFT)

Electronic system that transfers funds without the use of paper and checks.

Residual value

Estimated value of an asset after all the allowable depreciation has been taken.

Phishing

Fake emails that attempt to obtain information about online banking customers.

Interim reports

Financial statements that are prepared for a month, quarter, or some other portion of the fiscal year.

Accounting cycle

For each accounting period, the process that begins with the recording of business transactions or procedures into a journal and ends with the completion of a post-closing trial balance.

Check

Form used to indicate a specific amount of money that is to be paid by the bank to a named person company.

Petty cash fund

Fund (source) that allows payment of small amounts without the writing of checks.

Trial balance

Informal listing of the ledger accounts and their balances in the ledger aid in proving the equality of debits and credits

Adjusting Journal Entries

Journal entries that are needed in order to update specific ledger accounts to reflect correct balances at the end of an accounting period.

Closing journal entries

Journal entries that are prepared to (a) reset all temporary accounts to a zero balance and (b) update Capital to a new balance.

compound journal

Journal entry that affects more than two accounts

Journal

Listing of business transactions in chronological order. The journal links on one page the debit and credit parts of transactions. Alternatively known as general journal

ATM (Automated Teller Machine)

Machine that allows depositing, withdrawals, and advanced banking transactions

Bank Statement

a report sent by the bank to a customer indicating the previous balance, ATM transactions, non sufficient funds, individual deposits received, service charges, and ending bank balance.

account

accounting device used in bookkeeping to record increases and decreases of business transactions relating to individuals assets, liabilities, capital, withdrawals, revenue, expenses, and so on

Double-entry bookkeeping

accounting system in which the recording of each transaction affects two or more accounts and the total of the debits is equal to the total of the credits

Accrual basis

accounting system that matches revenues when earned with expenses that are incurred

Depreciation

allocation (Spreading) of the cost of an asset (such as an auto or equipment) over its expected useful life.

Revenue

amount earned by performing services for customers or selling goods to customers; can be in the form of cash or accounts receivable. Subdivision of owner's equity: As revenue increases, owner's equity increases.

Calendar year

calendar year January 1 through December 31

debit memorandum

decrease in depositor's balance

Slide

error that results in adding or deleting zeros in the writing of a number

credit memorandum

increase in depositor's balance

Liabilities

obligations that come due in the future; financial rights or claims of creditors to assets

Owner's Equity

rights or financial claims to the assets of a business by the owner (in accounting equations, assets minus liabilities)

Accounting

system that measures the business's activities in financial terms, provides written reports and financial statements about those activities, and communicates these reports to decision-makers and others.

Debit

the left side of an account

Credit

the right side of an account