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Terms
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Definitions
Review Questions
100
External or internal transaction or change that is recorded in the double-entry bookkeeping system as a debit or credit entry.
What is an accounting event
100
Alternative term for nominal account.
What is nominal account
100
A system that updates inventory balance once in a period
What is periodic inventory system
100
The income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted.
What is Revenue
100
The earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project.
What is Return on Investment
200
the accounting classification of an account. It is part of double-entry book-keeping technique. An account has either credit or debit.
What is normal balance
200
Bookkeeping entries posted at the end of an accounting period to assign expenses to the period in which they were incurred, and revenue to the period in which it was earned.
What is adjusting entries
200
inventory and cost of goods sold are updated for each sale/purchase and return transaction.
What is perpetual inventory system
200
earned (usually when goods are transferred or services rendered), no matter when cash is received.
What is recognizing revenue
200
A measure of how well a company can meet its short-term financial liabilities. Also known as the acid-test ratio.
What is Quick Ratio
300
Normal balance for Owners equity
What is credit
300
Final bookkeeping entries made at the end of an accounting period to reduce all nominal accounts to zero. Balances of these accounts are transferred to the income summary account, and drawings are transferred to the owners' capital account.
What is closing entries
300
The recording of financial data pertaining to business transactions in a journal such that the debits equal credits.
What is journal entry
300
First-In, First-Out. Income taxes low during rising prices
What is FIFO
300
Systematic measures instituted by an organization to conduct its business in an orderly and efficient manner, safeguard its assets and resources, deter and detect errors, fraud, and theft, ensure accuracy and completeness of its accounting data, produce reliable and timely financial and management information, and ensure adherence to its policies and plans.
What is Internal Control
400
The normal balance for revenue and expenses
What is credit for expenses and debit for revenue
400
Short-term liabilities which continually occur during an accounting period but are not supported by an invoice or a written demand for payment.
What is accruals
400
Value of a product or service before any cash discounting is considered.
What is gross price method
400
Method of inventory valuation based on the assumption that the goods purchased most recently (the last in) are sold or used first.
What is LIFO
400
Indicator of a firm's ability to meet short-term financial obligations, it is the ratio of current assets to current liabilities.
What is current ratio
500
Alternative term for real accounts.
What is permanent accounts
500
It leads to not exactly knowing how much you owe someone.
What is when accruals are not matched.
500
A final price after deducting all discounts and rebates.
What is net price method
500
The act of trying to represent a fact that is not true.
What is overstated
500
currency unit issued as a coin or banknote, and used as a standard unit of value and a unit of account
What is monetary unit