Terms used in accounting. ACCOUNTING TERMS 2019-01-06

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Glossary of financial accounting terms

terms used in accounting

Bookkeeping - Recording of financial transactions in an accounting system. The main characteristics of this union will be a single currency and a more federal political structure. The auditor who no longer audits that client is the predecessor auditor. Now that you have a good understanding of the vocab, the next steps should be learning the. Also called a prepaid expense. Direct Material A material that will become part of a finished product and can be easily and economically traced to specific product units. Reference and source documents may not be retained after conversion.

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Accounting Terminology Guide

terms used in accounting

Double-Entry Bookkeeping Method of recording financial transactions in which each transaction is entered in two or more accounts and involves two-way, self-balancing posting. The general journal includes all transactions not included in specialized journals used for cash receipts, cash disbursements, and other common transactions. It is usually measured by reference to the gross receipts, or gross amounts due, from the sale of goods or services, etc. An audit procedure is effective if the evidence supports a correct conclusion. It must also be filed within the timeframe allotted or the refund may be lost. Depreciation can be claimed as a business expense to reduce income tax.

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Bookkeeping Terms and Basic Accounting Definitions

terms used in accounting

This maximum misstatement is the tolerable misstatement for the sample. For example, management asserts that sales in the income statement represent the exchange of goods or services with customers for cash or other consideration. Abusive transfer pricing occurs when income and expenses are improperly allocated for the purpose of reducing taxable income. Cash Flow - The difference in money flowing in and out. It has an especially significant role in international tax matters. An auditor may apply a procedure to all transactions or balances and fail to detect a material misstatement.

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Accounting Terminology Guide

terms used in accounting

It is found by dividing the number of days in a year by inventory turnover. Some such events provide additional evidence about conditions that existed at the balance sheet date, such as the bankruptcy of a customer with a history of financial difficulty. They add value by passing, storing and converting messages. A company is usually regarded as controlling another company if it holds more than 50% of the latter company's voting shares. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

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Bookkeeping Terms and Basic Accounting Definitions

terms used in accounting

It lists the date shipped, the customer, method of shipment, and quantities and specifications of goods shipped. Some businesses choose to do financial reports on a quarterly or annual basis. Typically, an early withdrawal will incur a penalty. Capital Expenditure Outlay of money to acquire or improve capital assets such as buildings and machinery. Statements for periods that have completely expired are not prospective financial statements. No assurance is provided on the statements or underlying assumptions.

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24 Accounting Terms Business Owners Should Know

terms used in accounting

A negative flow indicates more money going out than coming in. Control Risk Measure of risk that errors exceeding a tolerable amount will not be prevented or detected by an entity's internal controls. An auditor uses tests of cutoff to obtain evidence that transactions for each year are included in the financial statements of the appropriate year. While cost accounting is often used within a company to aid in decision making, is what the outside investor community typically sees. An example is to compare actual interest expense for the year a financial statement amount with an estimate of what that interest expense should be.

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Auditing Dictionary of Terms

terms used in accounting

Bank reconciliations are done to the end of the month, financial reports produced for the month, sales tax and payroll tax calculated for the month. Accountant Person skilled in the recording and reporting of financial transactions. Journal - The first place financial transactions are entered. The positive form is used when controls are weak or there are fewer, but larger, accounts. Unfortunately, in these cases, jargon can often be a huge stumbling block.

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Common Accounting Terms

terms used in accounting

B bad debt It is known that a credit customer debtor is unable to pay the amount due. Widely adopted principle in tax law, for example, where the taxpayer has the basic responsibility of declaring his taxable income or transactions. Also called the Balance Sheet Equation. It is often discussed as an alternative to the progressive tax. B Backup Withholding Payors of interest, dividends and other reportable payments must withhold income tax equal at a rate equal to the fourth lowest rate applicable to single filers if they fail to supply a federal id or if they fail to certify that they are not subject to it. C capital An amount of finance provided to enable a business to acquire assets and sustain its operations.


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