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# Glossary - Accounting Terms ## Financial Instruments **Profitability Percentage:** One of a number of percentages calculated by formula and used to assess the company's ability to earn a profit. **Provincial Sales Tax:** A percentage-based tax (established by the provincial government) on the p...

# Glossary - Accounting Terms ## Financial Instruments **Profitability Percentage:** One of a number of percentages calculated by formula and used to assess the company's ability to earn a profit. **Provincial Sales Tax:** A percentage-based tax (established by the provincial government) on the price of goods sold to a customer. **Proving Cash:** The process of counting cash receipts at the end of the day and comparing the total of the book figure for total cash receipts to the company's records. **Public Accountant:** An accountant who offers professional services to the general public. **Public Accounting:** The profession of the public accountant who provides a variety of accounting services to the public for a fee. **Public Corporation:** A company that obtains capital partly by shares sold to the general public, whose shares are listed on stock exchanges. **Purchase Invoice:** The supplier's sales invoice used in the purchaser's office. **Purchase on Account:** A purchase not paid for at the time of purchase; also called a purchase on credit. **Purchase Order:** A business form initiated by the Purchasing Department authorizing a supplier to ship goods or perform services as detailed on the form, with a bill to follow. **Purchases Journal:** A special columnar journal that records entries for all transactions involving the purchase of goods or services on account. **Pure Savings Account:** A bank account that pays a high interest rate and does not allow checks to be written. Mostly for savings. **Quick Ratio:** The ratio of current assets (excluding inventory) to current liabilities. Also known as Acid-test ratio. **Rate of Return on Net Sales:** The ratio of net earnings to net sales, expressed as a percentage, used to measure a company's net income performance comparatively. **Rate of Return on Owner's Equity:** The ratio of net earnings to average owner's equity expressed as a percentage, used to evaluate a company's performance relative to other investment opportunities like government bonds. **Raw Materials:** Essential components that become part of a finished product. **Real Accounts:** An account whose balance is not closed out at the end of the fiscal period but is carried forward to the next period. **Receipt on Account:** Money received from a debtor to reduce the balance owed by that debtor. **Receiving Report:** A business form initiated by the Receiving Department that contains detailed information about goods received from suppliers. **Registered Pension Plan:** A private pension plan, registered and approved by the government, for which contributions up to a maximum level may be deducted when calculating taxable income. Same as Registered retirement savings plan (RRSP). **Registered Retirement Savings Plan (RRSP):** A private pension plan, registered and approved by the government, for which contributions up to a maximum level may be deducted when calculating taxable income. Same as Registered pension plan. **Remittance Advice:** The tear-off portion of a cheque, or a separate business form, that accompanies the cheque, explaining what the cheque is for. **Report Form of Balance Sheet:** A balance sheet that presents information in a vertical format, with the assets section above the liabilities and equity section. **Restrictive Endorsement:** An endorsement that places a condition on the cashing or depositing of a cheque. **Retained Earnings Account:** The capital accumulated from company profits not yet paid to shareholders. **Retail Sales Tax:** A percentage tax added to the price of goods sold to a customer. **Retailer:** A merchandising business that buys goods from wholesalers and manufacturers and sells them to the public to make a profit. **Revenue:** An increase in equity resulting from the proceeds of selling goods or services. Same as Income. Opposite of Expense **Revenue Recognition Convention:** See GAAP Appendix. **Reversing Entry:** An entry made at the beginning of an accounting period to reverse an adjusting entry made at the end of the previous accounting period. Part of the process for recording revenues and expenses in the proper accounting period. **Salary:** A fixed amount paid regularly to an employee for services, regardless of the number of hours worked. Typically paid by the week, half-month, or month. **Sale on Account:** A sale where no money is received at the time of sale; also known as a sale on credit.