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# Accounting Glossary This document appears to be a glossary of accounting terms. It defines various terms related to accounting, business, and finance. **Here's a summary of the terms:** **I. Financial Statements and Terminology:** * **Insiders:** Owners, managers, and executive group of a comp...

# Accounting Glossary This document appears to be a glossary of accounting terms. It defines various terms related to accounting, business, and finance. **Here's a summary of the terms:** **I. Financial Statements and Terminology:** * **Insiders:** Owners, managers, and executive group of a company who have access to internal information. * **Outsiders:** Individuals who do not have access to internal company information. * **Internal Control:** A plan of organization and methods to protect assets, ensure accuracy, and promote efficiency. * **Inventory Turnover:** Ratio calculated as the cost of goods sold divided by the average merchandise inventory. This indicates how quickly inventory is sold. * **Journal:** A specially ruled book where accounting entries are recorded in the order they occur. * **Journal Entry:** An accounting entry recorded in the journal. * **Journalizing:** The process of recording entries in the journal. * **Late Deposit:** A deposit made on the last day of a period, not appearing on the bank statement until the next period. * **Ledger:** A record of accounts, which can be stored in various formats (books, cards, tape, magnetically). * **Liability:** A debt of an individual, business, or organization. * **Limited Company:** (See Corporation) * **Limited Liability:** Restriction of responsibility for a business's debts; limited to the invested amount. * **Limited Partners:** Co-owners with limited liability restricted to their investments. * **Limited Partnership:** Arrangement where at least one owner has liability restricted to investment. * **Liquidation:** Selling a business's assets for cash. * **Liquidity:** Ease with which an asset can be converted to cash. * **Liquidity Ratio:** Ratio used to assess a company's ability to pay debts. * **Long-Term Liability:** A debt that won't be paid within a year. * **Loss-sharing Ratio:** Percentage of net loss apportioned among partners (after salaries and interest). * **Manufacturing Business:** A business that buys raw materials, transforms them, and sells the finished products for profit. * **Manufacturing Statement:** Summary of costs for producing goods in a given period. * **Master Budget:** A comprehensive financial plan to measure performance and control costs. * **Matching Principle:** (See GAAP Appendix) * **Materiality Principle:** (See GAAP Appendix) * **Merchandise Inventory:** The goods handled by a merchandising business. * **Merchandising Business:** A business that purchases goods to resell for profit. * **Multi-columnar Journal:** A journal with multiple columns to group similar entries, reducing posting work. * **Net Claim Code:** Code indicating employee marital status and dependents, influencing tax credits. * **Net Income:** Difference between total revenues and expenses when revenue exceeds expenses. * **Net Loss:** Difference between total revenues and expenses when expenses exceed revenue. * **Net Pay:** Earnings after deductions. * **Net Worth:** Difference between total assets and total liabilities; same as Capital or Owner's equity. * **Nominal Account:** Account balances not carried over to the next fiscal period (e.g., revenue, expense, drawings). * **Non-profit Organization:** Organization that performs community service with no profit intent (e.g., churches, clubs, societies). * **NSF Check:** Check returned by the bank because of insufficient funds. * **Inventory Turnover for trading businesses:** Calculated as the cost of goods sold divided by average merchandise inventory. Explains how often inventory is sold in a year. **II. Business Concepts:** * **Inventory turnover** For trading businesses, a ratio showing how many times inventory is sold in a year. * **Matching principles** is used to link revenues with expenses. * **Materiality principle** states that reporting errors or omissions are not significant enough to be concerned with.