Accounting Terms Quiz

Accounting Terms

• Expense: A decrease in equity, resulting from costs of materials and services used to produce revenue.
• Factory Overhead: Costs supporting the manufacturing process.
• Financial Analysis: Analyzing income statements and balance sheets to understand financial position.
• Financial Position: Business status, represented by assets, liabilities, and owner's equity.
• Fiscal Period: The time frame earnings are measured, (same as accounting period).
• Five-Journal System: Accounting system using 5 journals to record transactions of various types.
• Fixed Asset: A long-term asset used to produce goods or services (same as Plant and Equipment).
• Float: Small amount of bills and coins in a cash register for making change.
• Forwarding: Continuing an account or journal on a new page, carrying forward information.
• Freight-in: Transportation charges on incoming merchandise.
• Full Disclosure Principle: Guideline, see GAAP Appendix.
• Fundamental Accounting Equation: Equation stating total assets – total liabilities = owner's equity (A-L = OE).
• GAAP: Generally Accepted Accounting Principles.
• General Ledger: Book/file containing business accounts, excluding subsidiary ledgers.
• General Partner: Co-owner with unlimited liability and management responsibility.
• Generally Accepted Accounting Principles (GAAP): Guidelines for preparing accounting records and statements.
• Going Concern Concept: See GAAP Appendix.
• Goods and Services Tax (GST): Canadian value-added tax on most goods and services, collected by sellers and remitted to the federal government.
• Goods in Process: Partially finished goods with materials, labor, or overhead applied.
• Goodwill: Intangible asset, value exceeding the sum of net assets.
• Gross Pay: Earnings before payroll deductions.
• Gross Profit: Net sales minus the cost of goods sold.
• GST: See Goods and Services Tax.
• Harmonized Sales Tax (HST): Combined provincial and federal sales tax.
• Imprest Method: Petty cash handling where money removal is recorded when the fund is replenished.
• In Balance: Debit and credit account totals are equal.
• Income: Increase in equity from the sale of goods or services (same as Revenue).
• Income Sharing Ratio: Percentage of net income apportioned to partners, after salaries and interest.
• Income Statement: Summary of revenues and expenses, showing net income/loss.
• Income Summary Account: Temporary account for closing revenues and expenses before calculating net income.
• Indirect Labor: Wages for support staff in the manufacturing process (e.g., janitorial).
• Input Tax Credit: GST paid by a non-consumer business that can be subtracted from the GST collected from customers.
• Journal: A record of business transactions.
• Journal Entry: A record of a transaction in a journal.
• Liability: A company's debt, amount owed.
• Net Income: Total revenues minus total expenses.
• Net Loss: Total expenses are greater than total revenues.
• Output Tax: Tax collected.
• Owner's Equity: The difference between the business's total assets and total liabilities.
• Partners: Co-owners of a business.
• Plant and Equipment: Long-term assets used to produce goods or services.
• Payroll: Record of employee wages and salaries.
• Purchase Journal: A special journal used to record purchases.
• Quick Ratio: The ratio of current assets, excluding inventory, to current liabilities.
• Rate of Return on Net Sales: Percentage of net earnings to net sales.
• Revenue: Increase in equity from the sale of goods or services.
• Sales Tax: A tax charged on sales of goods and or services.
• Subsidiary Ledger: Detailed records for specific accounts.
• Transportation charges: Costs associated with moving goods.
• Time Period: A period of time used in financial reporting.
• Freight-out charges: The cost a business incurs to transport or deliver its products to customers.
• Financial Analysis: The study of financial statements to assess a company's performance.
• Financial position: The financial condition of a business, shown by assets, liabilities, and owner's equity.
• Fiscal period: The period of time used to measure and report earnings.
• Full Disclosure Principle: Principle requiring all significant information to be disclosed in financial statements, see GAAP Appendix.
• GAAP: In the US, Generally Accepted Accounting Principles, guidelines for preparing financial statements.
• General Ledger: A master accounting record for all accounts.
• General Partner: Partner with unlimited liability for business debts.
• Generally Accepted Accounting Principles (GAAP): Guidelines for recording and reporting financial information.
• Imprest Method: A petty cash system where the cash float is replenished periodically.
• Input Tax Credit: Businesses can deduct applicable GST that they collected while purchasing goods and services.
• Income Summary Account: A temporary account that collects revenues and expenses during the fiscal period.
• Indirect Expenses: Indirect labor, supplies
• Journal Entry: Record of a transaction, a debit and a credit.
• Liability: Amount of money a company owes.
• Net Income: Income after paying all expenses and taxes.
• Net loss: Expenses exceeding income.
• Output Tax: Tax collected.
• Owner's equity: Part of the business owned by the owners.
• Partner: Co-owner of a business.
• Plant and equipment: Long-term assets used to produce goods and/or services.
• Payroll: Record of employee wages and/or salary.
• Revenue: Increase in assets from selling goods and/or services.
• Sales Tax: A tax charged on sales of goods and or services.
• Subsidiary ledger: Detailed records for specific accounts.
• Transportation charges: Costs associated with moving goods.
• Time period: A period of time used in financial reporting.
• Freight-out charges: The cost a business incurs to transport or deliver its products to customers.
• **Transportation Charges:**Costs a business incurs to move goods from one location to another.