Accounting Vocabulary Words Flashcards

Terms Definitions
Owners equity
Rent Expense
Accounts Payable
Merchandiser current assets
CashReceivablesPrepaid ExpensesMerchandise Inventory
transferring information from a journal entry to a ledger account
Present obligation that entails settlement by probable future transfer or use of cash, goods, or services
Cost Principle
Assets should be recorded at
when preparing financial statements, a company should choose the accounting method that will be least likely to overstate assets or income
Anything of value that is owned.
return on investment
wealth earned: amount invested
rights of creditors represent debts of the business
Source Documents
a business paper from which information is obtained for a journal entry
money paid for the use of money
resources that are measured at a particular point in time (balance sheet)
legal agreements for the exchange of resources and services
every customer should have access tot he data provided so that the customer can view, change, delete, or block further use of the data provided
total current assets minus inventory over total current liabilities
quick ratio
The bank statement shows an account balance of $5,500. There are outstanding checks totaling $600 and an outstanding deposit of $400. The adjusted bank balance should be
Balance Sheet
A report showing all assets, liabilitites, and owner's equity in a business as of a specifice date
The heading for a balance sheet includes the name of the business, the title of the statement, and the specific date.
The person or business concern by whom a shipment is made
what does the GAAP do?
They are the rules
Manufacturing Business
buys raw materials, uses labor and machinery to transform them into finished products, and sells the finished products to individuals or other businesses
benefits less the costs of a decision option
operating cycle
the time that elapses from the purchase of inventory, to the exchange of inventory for accounts receivable, to the collection of that receivable
Accrual accounting
accounting that records the impact of a business event as it occurs regardless of wheter the transaction affected cash
Retained Earnings Statement
Describes the events that caused changes in the retained earnings account for the period.
Add net income to and subtract dividends from the beginning balance of retained earnings to arrive at the ending balance of retained earnings.
The Operating Cycle
Series of transactions that include: purchases of merchandise inventory for cash or on credit, payment for purchases made on credit, sales of merchandise inventory for cash or on credit, and collection of cash from credit sales.
Form 10K
A document that US companies file annually with the Securities and Exchange Commission. It contains the companies' financial statements.
a written order, usually on a standard printed form, directing a bank to pay money.
property or items of value owned by a business
used to record payment of an interest-bearing note payable
cash payment journal
an IRS form that employees fill out to tell employers how much they want taken out of the pay checks for taxes
business ethics
the ise of ethics in making business decisions
Sales invoice
An invoice used as a source document for recording a sale on account
Retained Earnings
are the earnings of the business that are kept or retained in the business.
Certified Public Accountant(CPA)
public accountants who have met a state's education, experience and examination requirments
Interest Calculation Formula
Principle * Annual Interest Rate * Time Expressed in years = Interest
Trial balance
A proof of the equality of debits and credits in a general ledger
cost of goods sold
the cost of the manufactured product sold
Sole Proprietorship
-Can only be 1 owner-is NOT a separate legal entity-Owner has UNLIMITED liability-Limited life-Owner pays taxes on net income Personally
Unsecured Bond (Debenture)
No assets are pledged as a guarantee of repayment at maturity
sale on account
A sale for which cash will be received at a later date.
receivables: percent of receivables method
use one B/S account to estimate another. (A/R used to determine allowance for bad debts accoutns) balance sheet orientated
at year end categorize receivables by age (aging method) then estimate the uncollectible accounts that will occur
receivables are presented at their net realizable value
What are Ordinary shares?
Shares of a company owned by those who are entitled to the benefits of the company's activities after all other stakeholders have been satisfied.
What is Retained Earnings?
Is net income that is retained in the business.
The balance in retained earnings is part of the stockholders' claim on the total assets of the corporation.
What are Unearned Revenues and how are they recorded in a journal entry, then how are they recorded once completed?
Unearned Revenues are recorded as liabilities until earned.

Cash XXX
Unearned Rev. XXX
(As services are earned)
Unearned Rev XXX
Revenue XXX
all costs of a plant asset are included in the amount to be depreciated
the cost of the item, sales tax and cost of delivery and set up
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