| A | B |
|---|
| Transaction | A business event (such as buying goods) that affect the acctg equation |
| Manufacturer | Business that transforms raw goods to finished products through labor and machinery |
| Assets | Property owned by business |
| Fiscal period | Accounting reporting period; usually a year |
| Liabilities | Amounts owed to creditors |
| Double-entry accounting | A system to verify at least 2 accounts are affected by each transaction |
| Revenue recognition principle | States that revenue must be recorded when earned |
| Permanent accounts | Balances in these accounts carry forward from 1 acctg period to the next |
| Source document | paper evidence a transaction occurred |
| Chart of accounts | List of all accounts used in a business |
| Posting | The process of transferring information from the journal to the ledger or T-accounts |
| Slide error | accidental misplacement of a decimal point in an amount |
| Net income | Amount left after expenses are subtracted from revenues |
| Income Statement | Calculates the net income or loss for the period |
| SOE | summarizes the equity accounts and calculated the ending balance of equity |
| Balance Sheet | proves the accounting equation |
| Accounting equation | A=L+OE |
| Net loss | The amount by which total expenses exceed revenues |
| transposition error | accidental reversal of two numbers |
| CJE's | journal entries made to close out or reduce balance to zero of temporary accounts |
| outstanding checks | checks written in the checkbook but not processed by the bank |
| compound entry | a journal entry with more than 1 debit or credit account |
| Signature card | Completed with name and signature to open a bank account |
| endorsement | Signature on back of check as a promise to pay |
| Drawee | bank on which the check is written |
| Drawer | person signing the check |
| Payee | Person receiving the check and money |
| Temporary accounts | balances reduce to zero at end of one acctg period to start new the next pd |
| commission | wages based on a percentage of sales |
| gross earnings | amount of money earned |
| net pay | amount of money taken home after deducations |
| social security tax | 6.2% |
| medicare tax | 1.45% |
| FICA | combination of SS and Medicare; 7.65% |
| payroll deduction | a tax or other amount subtracted from gross wages |
| bank reconciliaton | reconciling cash differences beteween the cash held at the bank and checkbook |
| trial balance | prove DR=CR |
| normal balance | side that increases an account |
| journal | business transactions are recorded here |
| revenue | money earned in a business |
| expenses | money spent to continue operations in the business |
| single ruling | means above amounts are added or subtracted |
| double ruling | numbers are in balance or complete |
