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Terms Definitions
C.P.A. Certified Public Accountant
dividends earnings distributed to stockholders
Expenses Cost of operating a business
passwords most commonly used authentication method
Encryption Rearranges messages by a mathematical process (code)
Perfection Standards Standards set assuming production takes place in an ideal world (never have a defect, never have equipment break down, employees are never late or slack off)
permanent accounts accounts used to accumulate information from one fiscal period to the next
Reconciled Balance the balance recorded as cash
Crossfooting Adding and subtracting numbers across a row.
FOB shipping titles changes hands on destiniation
Depreciation expense the amount of depreciation taken during the current fiscal year is properly termed
operation costing hybrid costing system used in manufacturing goods that have some common characteristics and some individual characteristics
Objectivity Principle Accounting information is supported by independent, unbiased evidence.
Income Statement a financial statement showing the revenue and expenses for a fiscal period.
Installment Note Obligation requiring a series of payments to the lender
Examples of Assets Cash; Accounts Receivable; Supplies; License; Equipment; Land
temporary accounts revenue and expense accounts whose balances are transfered to the owners capital at the end of an accounting period; also called nominal accounts
Net credit sales/average accounts receiveable accounts receivable turnover
Gross pay a total amount of an employee's earnings
Notes Receivable Promissory notes that a business has received
debit and credit double entry bookkeeping means an entry is made
withholding allowance a deduction from total earnings for each person legally supported by a taxpayer, including the employee
medicare tax a federal tax paid for hospital insurance
Balance Sheet Budgets Reflect the financing and investing activities
Cash and capital expenditures budgets
Depreciation Expense (Straight line method) (asset cost-salvage value)/(useful life)
The total amount that customers owe the company, from sales on account. Accounts Receivable
When the estimate based on analysis of receivables is used, income is reduced when a specific receivable is written off. false
Formula for Balance Sheet A = L + E
Date of a note The day a note is signed.
NOTES TO THE FINANCIAL STATEMENTS EXPLANATORY INFORMATION CONSIDERED AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
Retained Earnings An amount earned by a corporation and not yet distributed to stockholders.
Sales allowance Credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decreased in the vendor's accounts rec.
Assessed Value The value of an asset determined by tax authorities for the purpose of calculating taxes.
Tax Base Maximum amount of earnings on which a tax is calculated
What is the current ratio? current assets / current liabilities
Accounts receivable increases; revenues increases When delivery revenue is earned on account, which accounts increase and decrease?
Chart of accounts A list of accounts that shows the arrangement of the accounts in the ledger is called the
Stockholder An owner of one or more shares of a corporation.
1. Analysis of Transactions
2. Prepare Journal Entries
3. Posting Journal Entries to "General Ledger"
4. Prepare Trial Balance
5. Preparing Adjusting Journal Entries (AJE's)
6. Post the AJE's to the Journal Ledger
7. Prepare the Adjusted Trial Balan
Eleven steps to the accounting cycle.
What are product costs? costs linked with revenues and are charged as expenses when the related revenue is recognized
Book Value of Accounts Receivable The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts.
Prepare a "post-closing" trial balance to prove debit=credit. Eleventh step to the accounting cycle.
Short Term Notes Payable definition Lika a regular A/P excpet with interest
Causes of DM price variances – purchasing depart, cash discounts, quantity, etc.
Future payment of accrued expenses generally results in cash payments in the next period. Debit the payable for amount accrued and credit cash for the full amount paid. If the amount paid exceeds the amount accrued, the difference is an expense in the current period.
What are two very important steps in the accountant's records? the journal and general ledger - journal provides chronological record o transactions and general ledger provides a dated summary of effects of the transactions on accounts (account by account)
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