Accounting Terms

A set made from studying resources for FBLA Accounting 1 competition.

Account

a record summarizing all the information pertaining to a single item in the accounting equation

Account Balance

the amount in an account

Account Title

the name given to an account

Accounting

planning, recording, analyzing, and interpreting financial information

Accounting Equation

an equation showing the relationship among assets, liabilities, and owner's equity

Accounting Records

organized summaries of a business's financial activities

Accounting System

a planned process for providing financial information that will be useful to management

Asset

anything of value that is owned

Business Ethics

the use of ethics in making business decisions

Equities

financial rights to the assets of a business

Capital

the account used to summarize the owner's equity in a business

Ethics

the principles of right and wrong that guide an individual in making decisions

Expense

a decrease in owner's equity resulting from the operation of a business

Financial Statements

financial reports that summarize the financial condition and operations of a business

Liability

an amount owed by a business

Owner's Equity

the amount remaining after the value of all liabilities is subtracted from the value of all assets

Proprietorship

a business owned by one person

Revenue

an increase in owner's equity resulting from the operation of a business

Sale on Account

a sale for which cash will be received at a later date

Service Business

a business that performs an activity for a fee

Transaction

a business activity that changes assets, liabilities, or owner's equity

Withdrawals

assets taken out of a business for the owner's personal use

Chart of Accounts

a list of accounts used by a business

Credit

an amount recorded on the right side of a T account

Debit

an amount recorded on the left side of a T account

Normal Balance

the side of the account that is increased

T Account

an accounting device used to analyze transactions

Check

a business form ordering a bank to pay cash from a bank account

Double-Entry Accounting

the recording of debit and credit parts of a transaction

Entry

information for each transaction recorded in a journal

Invoice

a form describing the goods or services sold, the quantity, and the price

Journal

a form for recording transactions in chronological order

Journalizing

recording transactions in a journal

Memorandum

a form on which a brief message is written describing a transaction

Proving Cash

determining that the amount of cash agrees with the accounting records

Receipt

a business form giving written acknowledgement for cash received

Sales Invoice

an invoice used as a source document for recording a sale on account

Source Document

a business paper from which information is obtained for a journal entry

Special Amount Column

a journal amount column headed with an account title

Account Number

the number assigned to an account

Correcting Entry

an additional journal entry, used to correct an incorrect journal entry

File Maintenance

the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

General Ledger

a ledger that contains all accounts needed to prepare financial statements

Ledger

a group of accounts

Opening an Account

writing an account title and number on the heading of an account

Posting

transferring information from a journal entry to a ledger account

Bank Statement

a report of deposits, withdrawals, and bank balances sent to a depositor by a bank

Blank Endorsement

an endorsement consisting only of the endorser's signature

Checking Account

a bank account from which payments can be ordered by a depositor

Code of Conduct

a statement that guides the ethical behavior of a company and its employees

Debit Card

a bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

Dishonored Check

a check that a bank refuses to pay

Electronic Funds Transfer

a computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents

Endorsement

a signature or stamp on the back of a check transferring ownership

Petty Cash

an amount of cash kept on hand and used for making small payments

Petty Cash Slip

a form showing proof of a petty cash payment

Postdated Check

a check with a future date on it

Restrictive Endorsement

an endorsement restricting further transfer of a check's ownership

Special Endorsement

an endorsement indicating a new owner of a check

Adjustments

changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period

Balance Sheet

a financial statement that reports assets, liabilities, and owner's equity on a specific date

Fiscal Period

the length of time for which a business summarizes and reports financial information

Income Statement

a financial statement showing the revenue and expenses for a fiscal period

Net Income

the difference between total revenue and total expenses when total revenue is greater

Net Loss

the difference between total revenue and total expenses when total expenses are greater

Trial Balance

a proof of the equality of debits and credits in a general ledger

Work Sheet

a columnar accounting form used to summarize the general ledger information needed to prepare financial statements

Component Percentage

the percentage relationship between one financial statement item and the total that includes that item

Stakeholders

any persons or groups who will be affected by an action

Accounting Cycle

the series of accounting activities included in recording financial information for a fiscal period

Adjusting Entries

journal entries recorded to update general ledger accounts at the end of a fiscal period

Closing Entries

journal entries used to prepare temporary accounts for a new fiscal period

Permanent Accounts

accounts used to accumulate information from one fiscal period to the next

Post-Closing Trial Balance

a trial balance prepared after the closing entries are posted

Temporary Accounts

accounts used to accumulate information until it is transferred to the owner's capital account

Capital Stock

total shares of ownership in a corporation

Cash Discount

a deduction that a vendor allows on the invoice amount to encourage prompt payment

Cash Over

a petty cash on hand amount that is more than a recorded amount

Cash Payments Journal

a special journal used to record only cash payment transactions

Cash Short

a petty cash on hand amount is less than a recorded amount

Contra Account

an account that reduces a related account on a financial statement

Corporation

an organization with the legal rights of a person and which many persons may own

Cost of Merchandise

the price a business pays for goods it purchases to sell

Debit Memorandum

a form prepared by the customer showing the price deduction taken by the customer for returns and allowances

General Amount Column

a journal amount column that is not headed with an account title

List Price

the retail price listed in a catalog or on an internet site

Markup

the amount added to the cost of merchandise to establish the selling price

Merchandise

goods that a business purchases to sell

Merchandising Business

a business that purchases and sells goods

Purchase Invoice

an invoice used as a source document for recording a purchase on account transaction

Purchase on Account

a transaction in which the merchandise purchased is to be paid for later

Purchases Allowance

credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable

Purchases Discount

a cash discount on purchases taken by a customer

Purchases Journal

a special journal used to record only purchases of merchandise on account

Purchases Return

credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable

Retail Merchandising Business

a merchandising business that sells to those who use or consume the goods

Share of Stock

each unit of ownership in a corporation

Special Journal

a journal used to record only one kind of transaction

Stockholder

an owner of one or more shares of a corporation

Terms of Sale

an agreement between a buyer and a seller about payment for merchandise