Above The Line: This term can be applied to many aspects of
accounting. It means transactions, assets, etc., that are associated with the
everyday running of a business.
Account: An accounting record, grouped according to customer
or purpose, in which the results of transactions are accumulated; shows increases,
decreases, and a balance.
Accounting: Refers to the overall process of tracking your
business's income and expenses. By using these numbers in various calculations
and formulas to answer specific questions about the tax and financial status
of your business.
Accounting Cycle: The procedures for analyzing, recording,
classifying, summarizing, and reporting the transactions of a business from
the start of the year to closing them at the end.
Accounting Equation: The formula used to prepare a balance
sheet: Assets = Liability + Equity.
Accounting Model: The basic accounting assumptions, concepts,
principles, and procedures that determine the manner of recording, measuring,
and reporting an entity's transactions.
Accounting Period: A period of time for which records are maintained and at the end of which financial statements are prepared covering the period.
Accounting System: The set of manual and computerized procedures
and controls that provide for identifying relevant transactions or events; preparing
accurate source documents, entering data into the accounting records accurately,
processing transactions accurately, updating master files properly, and generating
accurate documents and reports.
Accounts Payable: An amount owed to a supplier or vendor for
good or services purchased on credit; payment is due within a short time period,
usually 30 days or less. Also called A/P.
Accounts Receivable: A current asset representing money due
for services performed or merchandise sold on credit. Also called A/R.
Accounts Receivable Turnover: A measure used to determine
a company's average collection period for receivables; computed by dividing
net sales (or net credit sales) by average accounts receivable.
Accrual-Basis Accounting: A system of accounting in which
revenues and expenses are recorded as they are earned and incurred, not necessarily
when cash is received or paid.
Accrued Expenses: Expenses that arise through adjusting entries
when accounting for unrecorded expenses.
Accrued Liabilities: Liabilities that arise through adjusting
entries when accounting for unrecorded liabilities.
Accrued Revenue: A revenue which has been earned during an
accounting period but which has not been paid or recorded because payment is
not due.
Accumulated Depreciation: The total depreciation recorded
on an asset since its acquisition; a contra account deducted from the original
cost of an asset on the balance sheet.
Acid-test Ratio (or quick ratio): A measure of a firm's ability
to meet current liabilities; more restrictive than the current ratio, it is
computed by dividing net quick assets (all current assets, except inventories
and prepaid expenses) by current liabilities.
Active Periods: Allow for posting of financial entries to
the sub-ledgers or General Ledger within the period specified.
Adjusted Gross Income: An individual taxpayer's total income
minus deductions (adjustments) for individual retirement plan contributions
and alimony paid.
Adjusting Entries: Entries required at the end of each accounting
period to recognize, on an accrual basis, revenues and expenses for the period
and to report proper amounts for asset, liability, and owners' equity accounts.
Adjustments to Gross Income: Amounts deducted from the gross
income of an individual taxpayer in arriving at adjusted gross income; includes
contributions to individual retirement plans and alimony paid.
Adverse Opinion: Audit report indicating the auditor believes
the overall financial statements are so materially misstated or misleading that
the statements do not fairly represent the financial position or results of
the operations and cash flows.
Aged Payables: An analysis of Accounts Payable which have
been classified according to the length of time that they have been outstanding
or that they have been due and payable. The time may be measured (aged) by invoice
date or by due date for each invoice (detailed) or by Supplier totals.
Aging Reports: In accounts receivable, it is a list of customers
open balances and their due dates. In accounts payable, it will help you manage
you outstanding bills.
Allowance for Bad Debits: It is an estimate of uncollectable
customer accounts.
Allowance Method: The recording of estimated losses due to
uncollectable accounts as expenses during the period in which the sales occurred.
Amortization: The process of cost allocation that assigns
the original cost of an intangible asset to the periods benefited.
Annual Report: A document that summarizes the results of operations
and financial status of a company for the past year and outlines plans for the
future.
Annuity: A series of equal amounts to be received or paid
at the end of equal time intervals.
Appropriation Account: An account in the nominal ledger which
shows how the net profits of a business (usually a partnership, limited company
or corporation) have been used.
Arm's-length Transactions: Business dealings between independent
and rational parties who are looking out for their own interests.
Arrears: Bills which should have been paid. For example, if
you have forgotten to pay your last 3 months rent, then you are said to be 3
months in arrears on your rent.
Articulation: The interrelationships among the financial statements.
Asset Turnover Ratio: An overall measure of how effectively
assets are used during a period; computed by dividing net sales by average total
assets.
Assets: Items of value held by the business. Examples: cash,
accounts receivable, fixtures, furniture, equipment, vehicles, buildings, and
money on hand or in the bank.
At Cost: The 'at cost' price usually refers to the price originally
paid for something, as opposed to, say, the retail price.
Audit: The result of an independent accountant's review of
the statements and footnotes to ensure compliance with generally accepted accounting
principles and to render an opinion on the fairness of the financial statements.
Audit Committee: Members of a client's board of directors
who are responsible for dealing with the external and internal auditors.
Audit Report: A report issued by an independent CPA that expresses
an opinion about whether the financial statements present fairly a company's
financial position, operating results, and cash flows in accordance with generally
accepted accounting principles.
Audit Trail: Information in the accounting system that allows
you to reconstruct how a transaction affected each account balance, who performed
the processing, etc..
Authorized Stock: The amount and type of stock that may be
issued by a company, as specified in its articles of incorporation.
Automatic Allocation: Pre-defined distributions ratios which
apportion and assign debits and credits to the appropriate accounts. When an
automatic allocation code is entered at the time a Supplier invoice is recorded,
the automatic allocation program will distribute the invoice total to the pre-determined
accounts and for the proper amounts.
Available-for-sale securities: Debt and equity securities
not classified as trading, held-to-maturity, or equity method securities.
|