accounting terms for test 2

accounting terms for test 2 - Account - a record of...

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Account - a record of increases and decreases in specific asset, liability, or owner’s equity items Accounting – the info system that identifies, records, and communicates the economic events of an organization to interest users. Accounting information system - a system that collects and processes transaction date, and communicates financial information to decision markers Accounts payable (creditors) subsidiary ledger - a subsidiary ledger that collects transaction data of individual creditors. Daily postings for purchasers on account and for cash payments to vendors. Separate account in subsidiary ledger for each vendor and daily postings of purchases and cash payments. Accounts receivable (customers) subsidiary ledger – a subsidiary ledger that collects transaction data of individual customers. Daily postings for sales on account and to collection of cash for customers. Daily postings of sales and cash collections totaled at EOM for each customer and total of all customer sales and cash collections posted to the general ledgers accounts receivable account. The general ledger accounts receivable account is a “control” account for accounts receivable subsidiary ledger. Accrual-basis accounting - accounting basis in which company’s record transaction that change a company’s financial statements in the periods in which the events occur Accruals adjusting entries for either accrued revenues or accrued expenses Accrued Expenses - expenses incurred but not yet paid in cash or recorded Accrued revenues - revenues earned but not yet received in cash or recorded Adjusted Trial Balance - a list of accounts and their balances after the company has made all adjustments Adjusting entries - entries made at the end of an accounting period to ensure that companies follow the revenue recognition and matching principles. Assets – Resources a business owns Average cost method – allocate the cost of goods available for sale on the basis of the weighted average unit cost to allocate to ending inventory and cost of foods sold the cost of goods available for sale. Total cost of goods available for sale / total units available for sale = average unit cost; Average unit cost x units left on hand, then subtract that number from COGS. Balance Sheet – A financial statement that reports the assets, liabilities, and owner’s equity at a specific date Balance Sheet Effects – In a period of rising prices, fifo reflects an ending inventory at current prices. Use of lifo during a period of rising prices results in an ending inventory that has not had enough costs allocated to it as reflected by current prices. Basic Accounting equation – Assets = Liabilities + Owner’s Equity Book value - the difference between the cost of a depreciable asset and its related accumulated depreciation. Bookkeeping
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This note was uploaded on 11/24/2010 for the course ACCOUNTING Accounting taught by Professor Fabrio during the Spring '10 term at Rowan.

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accounting terms for test 2 - Account - a record of...

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