Accounting Terminology Guide

Accounting Terminology Guide - Accounting and Finance
Terms

Abatement
Complete removal of an amount due, (usually referring to
a tax ABATEMENT a penalty abatement or an INTEREST abatement within a
governing agency).

Absorption Costing
An approach to product costing that assigns a representative portion of all types of
manufacturing costs--direct materials, direct labor, variable factory overhead, and fixed
factory overhead--to individual products.

Accelerated Depreciation
Method that records greater DEPRECIATION than STRAIGHT-LINE
DEPRECIATION in the early years and less depreciation than straight-line in the later
years of an ASSET'S HOLDING PERIOD.

Account
Formal record that represents, in words, money or other unit of measurement, certain
resources, claims to such resources, transactions or other events that result in changes
to those resources and claims.

Account Payable
Amount owed to a CREDITOR for delivered goods or completed services.

Account Receivable
Claim against a DEBTOR for an uncollected amount, generally from a
completed transaction of sales or services rendered.

Accountable Plan
Any reimbursement or other expense allowance arrangement of an employer that
meets all of the following requirements (therefore excluding it from gross w-2 EARNED
INCOME and tax): (1) it provides reimbursements advances or allowances including
per diem and meals, to employees for any job related deductible business expense; (2)
employees must be able to substantiate expenses covered in the plan; (3) employee
must return any excess advances or payments.

Accountant
Person skilled in the recording and reporting of financial transactions.

Accountants' Report
Formal document that communicates an independent accountant's: (1) expression of
limited assurance on FINANCIAL STATEMENTS as a result of performing inquiry and
analytic procedures (REVIEW REPORT); (2) results of procedures performed
(AGREED-UPON PROCEDURES REPORT); (3) non-expression of opinion or any form
of assurance on a presentation in the form of financial statements information that is the
representation of management (COMPILATION REPORT); or (4) an opinion on
an assertion made by management in accordance with the Statements on Standards
for Attestation Engagements (ATTESTATION REPORT). An accountants' report does
not result from the performance of an AUDIT.

Accounting
Recording and reporting of financial transactions, including the origination of the
transaction, its recognition, processing, and summarization in the FINANCIAL
STATEMENTS.

Accounting Change
Change in (1) an accounting principle; (2) an accounting estimate; or (3) the reporting
entity that necessitates DISCLOSURE and explanation in published financial reports.

Accounting Cycle
The sequence of steps followed in the accounting process to measure business
transactions and transform the measurements into FINANCIAL STATEMENTS for a
specific period.

Accounting Principles Board (APB)
Senior technical committee of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS (AICPA) which issued pronouncements on accounting principles from
1959-1973. The APB was replaced by the FINANCIAL ACCOUNTING STANDARDS
BOARD (FASB).

Accounts Payable Subsidiary Ledger
A financial record of an individual ACCOUNT PAYABLE in which entries can be made
daily.

Accounts Receivable Turnover
Used to measure a company’s ability to collect cash from credit customers. Found by
dividing net sales by average net ACCOUNT RECEIVABLE.

Accrual
The recognition of an expense or revenue that has occurred but has not yet been
recorded.

Accrual Accounting
The attempt to record the financial effects of transactions and other events in the
periods in which those transactions or events occur rather than only in the periods in
which cash is received or paid by the business, using all the techniques developed by
accountants to apply the MATCHING PRINCIPLE.

Accrual Basis
Method of ACCOUNTING that recognizes REVENUE when earned, rather than when
collected. Expenses are recognized when incurred rather than when paid.

Accrued Expense
An expense that has occurred but is not recognized in the accounts.

Accrued Interest
INTEREST that has accumulated between the most recent payment and the sale of
a BOND or other fixed-income security.

Accumulated Depreciation
Total DEPRECIATION pertaining to an ASSET or group of assets from the time the
assets were placed in services until the date of the
FINANCIAL STATEMENT or tax return. This total is the CONTRA ACCOUNT to the
related asset account.

Accumulation
Profits that are not paid out as DIVIDENDS but are instead added to the company’s
capital base.

Acid-Test Ratio
The relationship of a company’s current assets that can be converted into cash to its
current liabilities. It is determined by dividing QUICK ASSETS by current liabilities.

Acquisition
One company taking over controlling interest in another company.

Accounting Terminology Guide

Uploaded by

Copyright:

Available Formats

Accounting Terminology Guide

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounting Terminology Guide

Uploaded by

Copyright:

Available Formats

Accounting Terminology Guide - Accounting and Finance

You might also like