Glossary of Accounting Terms

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Flashcards by racheloucks, updated more than 1 year ago
racheloucks
Created by racheloucks over 6 years ago
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Grade 11 Accounting Flashcards on Glossary of Accounting Terms, created by racheloucks on 06/24/2013.
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Account a form in which changes caused by transactions are recorded
Accounting cycle: the set of accounting procedures performed in each accounting period.
Accounting Period The period of time covered by the financial statements. AKA "fiscal period"
Accural basis of accounting The system under which revenue is recorded when earned and expenses are recorded when incurred.
Balance Sheet Equation Assets = Liabilities + Owner's Equity
Book value the cost of an asset minus the accumulated depreciation
Business Equity Principle: states that each business is considered a separate entity, and the financial data for the business must be kept separate from the owner's personal financial data.
Contra Account an account that reduces the value of the account it is "linked" to.
Cost principle: States that assets must be shown on the balance sheet using the cost the were purchased for.
Credit Invoice (source document) issued by the seller to the customer for returned goods (for credit)
Current ratio: current assets _______________ current liabilities
Debt ratio: Total Liabilities ________________ Total Assets
Declining balance depreciation: Method of calculating depreciation Book Value = Cost − Accumulated Depreciation Then multiply that by the rate.
Double entry accounting: a system of accounting where debits must equal credits for each transaction
Equity ratio: Owner's Equity ______________ Total Assets
General partnership a partnership where all partners have unlimited liability.
GAAP General Accepted Accounting Principles. Standard accounting rules and guidelines
HST 13% TAX
limited partnership: a form of partnership where there is a limited partner (with limited personal liabilities) and a general partner.
Matching Principle: States that expenses for a fiscal period must match the revenue generated in that same period to give an accurate net income.
Principle of Materiality: states that information that could affect the decisions of users of financial statements should be included when financial statements are prepared.
Merchandise Turnover Formula Cost of Goods Sold __________________ Average Inventory
Principle of Objectivity: States that accounting records should be based on the objective evidence provided by source documents to support the values used in recording transactions.
Periodic Inventory Method: merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period (Has purchase returns)
Perpetual Inventory Method: Requires a continuous record of all merchandise on hand updated when ever a transaction occurs. COGS is an account
Petty Cash fund: an amount of cash used to make small payments. All payments must be matched to a voucher
Quick Ratio: Cash - Accounts Rec. - Stocks/Bonds _______________________________ Current Liabilites
Bank Reconciliation Statement: Brings the banks records into agreement with your own records.
Time Period Principle: The definite and consistent used of the same accounting period.
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