Accounting

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Balance Sheet: "One of the basic financial statements; it lists the assets, liabilities, and equity accounts of the company. The Balance Sheet is prepared using the balances at the end of a specific day."
Declaration date: The date on which the board of directors has declared a dividend.
Periodic inventory system: An inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period.
Issued shares: The number of shares that the company has sold to the public.
Machinery: The cost of machinery owned by the company.
Specialized journals: Journals that are used to aid in segregating duties and making the accounting function efficient.
Journalizing: The process of taking a transaction and putting it into a form that allows it to be recorded in the accounting records.
Sales: Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue.
Office expense: The amount of expense incurred for the general operation of an office.
Purchases journal: A journal used to record the transactions that result in a credit to accounts payable.
Land improvements: "The cost of improvements to land owned by the company, such as fencing and outdoor lighting."
Perpetual inventory system: An inventory system in which the balance in the Inventory account is adjusted for the units sold each time a sale is made.
Payment date: The date established for the payment of a declared dividend.
Accounts payable: "Amounts owed by the company for goods and services that have been received, but have not yet been paid for. Usually Accounts payable involves the receipt of an invoice from the company providing the services or goods."
Trial balance: A listing of all the accounts and their balances on a specified day.
Equipment: The cost of equipment owned by the company.
Purchases: Items purchased by the company for the purpose of resale.
Vehicles: The cost of transportation equipment owned by the company.
Common stock: Shares of ownership sold to the public.
Salary expense: The amount paid to employees for services rendered; synonymous with payroll expense and wage expense.
Control account: An account maintained in the general ledger that holds the balance without the detail. The detail is maintained in a subsidiary ledger.
Purchase returns: A contra account that reduces purchases by the amount of items purchased that were subsequently returned.
Adjusting entries: The entries needed at the end of an accounting period to properly state certain account balances.
Accounts receivable: "Amounts owed to the company, generally for sales that it has made."
Payroll taxes payable: The amount of payroll taxes owed to the various governments at the end of a period.
Expenses: Costs involved in running the company.
Rent expense: The amount of expense paid for the use of property.
Permanent accounts: The accounts found on the Balance Sheet; these account balances are carried forward for the lifetime of the company.
Additional paid-in capital: Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.
Accumulated depreciation: A contra-fixed asset account representing the portion of the cost of a fixed asset that has been previously charged to expense. Each fixed asset account will have its own associated accumulated depreciation account.
Posting: The process of taking journal entries and recording them in the general ledger.
Indirect method: "A method of preparing the operating section of the Statement of Cash Flows that does not use the company's actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities."
"First-in, first-out": A method of accounting for inventory.
Direct write-off method: A method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers.
Temporary accounts: The accounts found on the Income Statement and the Statement of Retained Earnings; these accounts are reduced to zero at the end of every accounting period.
Statement of Cash Flows: "One of the basic financial statements; it lists the cash inflows and cash outflows of the company, grouped into the categories of operating activities, financing activities, and investing activities. The Statement of Cash Flows is prepared for a specified period of time."
Notes payable: Amounts owed by the company that have been formalized by a legal document called a note.
Bank reconciliation: The process of taking the balances from the bank statement and the general ledger and making adjustments so that they agree.
Allowance method: A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
Credit: "One side of a journal entry, usually depicted as the right side."
Cash receipts journal: A journal used to record the transactions that result in a debit to cash.
Gross profit: The result of subtracting cost of goods sold from sales. Synonymous with gross margin.
Authorized shares: The number of shares of stock that the company is legally authorized to sell.
Ratio analysis: A method of relating numbers from the various financial statements to one another in order to get meaningful information for comparison.
Building: The cost of buildings owned by the company.
Dividends: Amounts paid to the owners of a company that represent a share of the income of the company.
Office supplies: The cost of the supplies used in running an office.
Revenue: Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term sales.
Capital in excess of par: Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.
Stockholders' equity: The total amount of contributed capital and retained earnings; synonymous with shareholders' equity.
Furniture: The cost of furniture owned by the company.
No par value stock: Stock issued by the company that does not have an arbitrary value (par value) assigned to it.
Contra-asset account: An offset to an asset account that reduces the balance of the asset account.
Stated value stock: "Stock issued by the company that does not have a par value, but does have a stated value. For accounting purposes, stated value is functionally equivalent to par value."
Leasehold improvements: The cost of improvements made to property that the company leases.
Debit: "One side of a journal entry, usually depicted as the left side."
Outstanding shares: The number of shares that are in the hands of the public. The difference between issued shares and outstanding shares is the shares held as treasury stock.
Treasury stock: "Shares that were sold to the public but have since been repurchased by the company in the open market. Treasury stock is deducted from the equity section, and is therefore a contraequity account."
Income Statement: One of the basic financial statements; it lists the revenue and expense accounts of the company. The Income Statement is prepared for a given period of time.
General ledger: A book that contains all the accounts of the company and the balances of those accounts.
Bad debts: The amount of accounts receivable that is not expected to be collected.
Specific identification: A method of accounting for inventory.
Fixtures: The cost of fixtures owned by the company.
Liquidity: "A term that means nearness to cash; the closer an asset is to becoming cash or a liability is to using cash, the more liquid that asset or liability is."
Weighted average: A method of accounting for
Articulation: When numbers from different financial statements relate to one another.
Sales discounts: A contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales.
Salaries payable: Salaries that are owed but have not been paid at the end of a period.
Subsidiary ledger: An accounting record giving the detailed transactions in an account; the subtotals of the debits and credits are posted to the control account maintained in the general ledger. It helps to keep the general ledger free of clutter.
Notes receivable: Amounts owed to the company that have been formalized by a legal agreement called a note.
Petty cash: The amount of currency and coin that a company keeps on hand to pay for small purchases and expenses.
Record date: The date used to decide which shareholders will receive the dividend. The owners of the shares at the end of this day are entitled to the dividend.
Par value: An arbitrary value assigned by the company to each share of stock; it is used in the accounting for the sale of stock and in some jurisdictions for calculating taxes.
T account: "The format used for a general ledger page. The name of the account is put on the top line, and a vertical line is dropped from the top line (hence the ''T''). Debits are recorded on the left side, and credits are recorded on the right."
Contra-equity account: An account that reduces an equity account. An example is Treasury stock.
Prepaid expenses: Expenses that have been paid for but have not yet been used up; examples are prepaid insurance and prepaid rent.
Intangible assets: "Assets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises."
Unearned revenue: Money that has been paid by customers for work yet to be done or goods yet to be provided.
Assets: Items owned by the company or expenses that have been paid for but have not been used up.
Payroll tax expense: "The amount of tax associated with salaries that an employer pays to governments (federal, state, and local)."
Straight-line: A method of depreciation
Interest payable: The amount of interest that is owed but has not been paid at the end of a period.
Bonds payable: Amounts owed by the company that have been formalized by a legal document called a bond.
Interest income: "Income that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies."
Wage expense: The amount paid to employees for services rendered; synonymous with salary expense and payroll expense.
Reversing entry: An entry that is made at the beginning of the current period so that the systems and procedures do not have to be altered to allow for previously accrued items.
Sales returns: A contra account that offsets revenue. It represents the amount of sales made that were later returned.
Cash disbursement journal: A journal used to record the transactions that result in a credit to cash.
Cost of goods sold: The cost of the items that were sold during the current period.
"Last-in, first-out": A method of accounting for inventory.
Shareholders' equity: The total amount of contributed capital and retained earnings; synonymous with stockholders' equity.
Direct method: A method of preparing the operating section of the Statement of Cash Flows that uses the company's actual cash inflows and cash outflows.
Net income: The last line of the Income Statement; it represents the amount that the company earned during a specified period.
Payroll expense: The amount paid to employees for services rendered; synonymous with salary expense and wage expense.
Retained Earnings: "One of the basic financial statements; it takes the beginning balance of retained earnings and adds net income, then subtracts dividends. The Statement of Retained Earnings is prepared for a specified period of time."
Retained earnings: The residual earnings of the company.
Sales journal: A journal used to record the transactions that result in a credit to sales.
Declining-balance: A method of depreciation.
Dividend income: Income that a company receives in the form of dividends on stock in other companies that it holds.
Loans payable: Amounts that have been loaned to the company and that it still owes.
Accrued expenses payable: Expenses that have to be recorded in order for the financial statements to be accurate. Accrued expenses usually do not involve the receipt of an invoice from the company providing the goods or services.
Cash: Amounts held in currency and coin (commonly referred to as petty cash) and amounts on deposit in financial institutions.
Accounting equation: The formula Assets Liabilities Equity.
Equity: Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
Depreciation expense: An expense account that represents the portion of the cost of an asset that is being charged to expense during the current period.
Closing entries: "The entries that transfer the balances in the revenue, expense, and dividend accounts to Retained earnings and zero out the revenue, expense, and dividend accounts for the next period."
Contributed capital: The amount put into the business by the owners by purchasing stock and by paying more than the par value for the stock (additional paid-in capital or capital in excess of par).
Land: The cost of land owned by the company.
Liabilities: Amounts owed by the company.
Payroll journal: A journal used to record the payroll of a company.
Purchase discounts: A contra account that reduces purchases by the amount of the discounts taken for early payment.
Allowance for doubtful accounts: A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
Inventory: The cost of the goods that a company has available for resale.

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