Expediting Financial Control
TERMINOLOGY
Account A record in the general ledger that is used to collect and store similar information. For example, a company will have a Cash account in which every transaction involving cash is recorded. A company selling merchandise on credit will record these sales in a Sales account and in an Accounts Receivable account.
Accounts Payables This current liability account will show the amount a company owes for items or services purchased on credit and for which there was not a promissory note. This account is often referred to as trade payables (as opposed to notes payable, interest payable)
Accounts Receivables The combined amount of the debit balance in the current asset account and the credit balance in the contra asset account Allowance for Doubtful Accounts. The difference between the balances in these two accounts is an approximation of the amount of the accounts receivable that is likely to turn to cash (be collected).
Accrual Method An accounting method that reflects expenses incurred and income earned for any one tax year. In contrast to the cash basis of accounting, expenses do not have to be paid to be deductible, nor does income have to be received to be taxable.
Balance Sheet Financial statement, reporting assets and equities as of a specific date, also known as a Statement of Financial Position.
Booked Slang for "recorded in the firm's accounts"
Bookkeeping The recording of a company's transactions into the accounts contained in the general ledger. It is usually associated with the accounting tasks prior to the preparation of the trial balance.
Cash Basis A method of accounting that generally reports income when cash is collected and reports expenses when cash payments are made.
Customized Statements A financial statements (along with the income statement and balance sheet). The statement of cash flows reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified in the heading of the statement.
Income or Profit and Loss Statement The final statement reporting all revenues, gains, expenses, and losses for the period, together with EPS data.
On-Line Bookkeeping With the arrival of computers and accounting software, bookkeeping errors decreased and efficiency increased. For example, the accounting software will refuse a journal entry if the debit amount entered does not equal the credit amount entered. Further, because journal amounts are posted electronically and account balances are calculated electronically, the potential for human error in these tasks is eliminated. As an example of how bookkeeping has become more efficient, consider that the following tasks now occur simultaneously when a credit sale is processed with accounting software. At large companies, the bookkeeping function is likely to be divided among a number of clerking specialists, such as accounts payable clerks, accounts receivable clerks, payroll clerks, and accounting clerks, each of whom use the accounting software to carry out their specific responsibilities.
Payroll Withholdings The amounts withheld for employees' checks for Social Security tax, Medicare tax, federal income tax, state income tax, and voluntary deductions such as United Way, union dues, 401(k) contributions, employee's portion of health insurance.
QuickBooks QuickBooks is the most commonly used small-business accounting and management software in the US. It is made by Intuit.
Reconciliations A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies. Since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.
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