PREPARING FOR ACCOUNTING
COMPETITIVE EVENTS
Student organizations such as Future Business Leaders of America and Business
Professionals of America seek to recognize and promote excellence in a broad range of
business and career-related areas. Such organizations offer competitive events in
accounting and other areas. Guidelines for these tests or events may be updated each year
and distributed to all chapters. Make sure you are using the most recent version of the
guidelines to prepare for a competition. Sample tests may be provided by the organization
to orient students to the format of the tests and give some idea of the content covered.
Studying these sample tests can help students be successful in the competitive event.
Several sample tests for accounting are provided on this Instructor’s Resource CD-ROM.
This document includes the following information that can help students prepare for
competitive tests for accounting. You may distribute this document to your students in
print or electronic form in all or part.
Accounting Concepts and Procedures
Accounting Terms
This document is a supplement to Century 21 Accounting published by South-Western
Educational Publishing.
Accounting Concepts and Procedures
Study Strategy




State the concept or procedure in your own words.
List three to five important points related to the concept or procedure.
Review the explanation of the concept or procedure in the textbook.
Practice applying the concept or procedure or review problems completed earlier that
apply the concept or procedure.
Tip: Pay special attention to preparing financial statements for corporations and to how
they differ from other business forms, especially if you have not yet completed your
study of chapters that deal with corporations.
CENTURY 21 ACCOUNTING, MULTICOLUMN JOURNAL
Concept or
Procedure
The purpose of
accounting
Review Page
Number(s)
4-6
Apply and Practice
Applied Communications
Cases for Critical Thinking
3
Enrichment Activity Ch. 1
Page
Number(s)
178, 195
220
16
Demonstrate the effects
of transactions on the
accounting equation,
for example, T
accounts
9-11, 14, 2628, 30, 40, 4243, 45-49, 5155
Audit Understanding
Work Together
On Your Own
Application Problem
12
12, 29, 44, 50,
56
12, 29,44, 50,
56
17-20, 33-36,
58-61
Understand the Accounting Cycle for a Service Business
Prepare a chart of
accounts
99-100
Audit Understanding
Work Together
On Your Own
Explore Accounting
Application Problem
Preparing For Accounting Competitive Events
102
102
102
118
119
2
Concept or
Procedure
Apply information
from source documents
Review Page
Number(s)
66-68
Apply and Practice
Page
Number(s)
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Activity 1A
Foreign Exchange
Fitness Junction
Putting Green Supply
71
71, 75, 81, 87
71, 75, 81, 87
89-92
151-153
223
449
690
Post general journal
entries
96-, 97, 103105, 107-110,
112-116
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
Foreign Exchange
106,111
106,111
106,111
119-120
151-153
223
Prepare a trial balance
157
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Activity 1B
Foreign Exchange
158
158
159
175-177
160-163
198-201
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
164
164
175-177
222
223
Record end-of-period
adjustments
161-163
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
164, 222
165, 223
175-177
222
223
Update accounts
through adjusting
entries
198-201
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
202
202
202
217-219
222
223
Calculate end-of-period
adjustments
Preparing For Accounting Competitive Events
222
223
3
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Update accounts
through closing entries
203-208
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
209
209
209
217-219
222
223
Prepare a post-closing
trial balance
210-213
435-438
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
215
215
215
218-219
222
223
Prepare financial
statements
180-185
187-190
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
186,191
186,191
186,191
193-195
222
223
Understand the Accounting Cycle for a Merchandising Business
Contrast the
characteristics of a
service and a
merchandising business
Analyze transactions
relating to purchase of
merchandise
4-216
226-440
228, 230-231,
233-234, 455,
456
Terms Review
Audit Understanding
Applied Communications
Enrichment Activities Ch.
2, 10, 16
Terms Review
Enrichment Activities Ch.
10, 16
8
8
220
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
232,237
232,237
232,237
245-247, 270
360-363
449
520-523
690
Preparing For Accounting Competitive Events
32, 244, 413
232
244, 413
4
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Analyze transactions
relating the sale of
merchandise
252-258
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
259
259
259
259
268-271
360-363
449
520-523
690
Record transactions in
special journals
452-469, 486498, 506, 508,
534, 535, 546,
547, 557, 559,
560, 598-601,
604, 619, 624
Terms Review
492,498,503,
509
492,498,503,
509
464, 469,
492,498,503,
509, 536, 548,
561, 602, 606,
620, 626, 639
464, 469,
492,498,503,
509, 536, 548,
561, 602, 606,
620, 626, 639
477-481,511516, 538-540,
567-569, 608610, 628-630,
654-655
520-523
690
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 3A
Putting Green Supply
Prepare schedules for
subsidiary ledgers
292-293, 502
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
Preparing For Accounting Competitive Events
294
294
294, 503
294, 503
297-299, 512516
360-363
449
520-523
690
5
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Generate trial balances
366-367
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
371
371
371
386
448
449
688-689
690
Generate end-of-period
adjustments
368-369, 373376, 422-424,
528, 554-555,
614-617, 621622, 640-648,
675
Audit Understanding
Work Together
377, ,425, 681
371, 377, 425,
530, 556, 620,
626, 645, 681
372, 377, 425,
530, 556, 620,
626, 645, 681
386-388, 441446, 538-539,
568, 628-630,
654-656, 684
448
449
688-689
690
On Your Own
Application Problem
Reinforcement Act. 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
Prepare financial
statements
390-411
Terms Review
660-673
(Corporations)
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
396,401,407,
412,665,668,
674
396,401,407,
412,655,688,
674
396,401,407,
412,665,668,
674
396,401,407,
412,665,668,
674
414-417,683684
448
449
688-689
690
Perform Payroll and Banking Procedures
Preparing For Accounting Competitive Events
6
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Compute gross pay
304-306
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Fitness Junction
307
307
307
307
323-326
449
Compute net pay
314-317
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Fitness Junction
318
318
318
318
323-326
449
Compute employeepaid withholdings
308-312
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Fitness Junction
313
313
313
313
323-326
449
Compute payroll tax
expense forms
341-349
Audit Understanding
Work Together
On Your Own
Application Problem
345
345
345
353-356
Complete payroll tax
expense forms
341-349, 346350
Audit Understanding
Work Together
On Your Own
Application Problem
351
345, 351
345, 351
353-356
Compute salary
expenses
336-339
Audit Understanding
Work Together
On Your Own
Application Problem
Fitness Junction
340
340
340
353-356
449
Prepare payroll
registers
314-317
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Fitness Junction
318
318
318
318
323-326
449
Preparing For Accounting Competitive Events
7
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Record payroll
transactions in journals
332-334, 339,
348, 350
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
335
335, 340, 351
335, 340, 351
353-356
360-363
449
520-523
690
Complete payroll tax
forms
309, 341-350
Audit Understanding
Work Together
On Your Own
Application Problem
345
345
3451
353-356
Reconcile a bank
statement
131-134
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
Foreign Exchange
Fitness Junction
135
135
135
146-148
151-153
223
449
Prepare commercial
bank deposits
126-129
Work Together
On Your Own
Fitness Junction
Putting Green Supply
130
130
449
690
Preparing For Accounting Competitive Events
8
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Perform Specialized Accounting Procedures
Calculate depreciation
of plant assets
549-551, 558,
562-564
Terms Review
Application Problem
Putting Green Supply
552,556,
561,565
552,556,
561,565
552,556,
561,565
552,556,
561,565
567-569
690
Audit Understanding
Work Together
On Your Own
Record depreciation of
plant assets
553-560
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
556, 561,565
556, 561,565
556, 561,565
556, 561,565
567-569
690
Prepare depreciation
schedules
553-555
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
556
556
556, 565
556, 565
567-569
Determine
uncollectible accounts
receivable
524-535
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
530,536
530,536
530,536
530,536
538-540
690
Record uncollectible
accounts receivable
524-535
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
530,536
530,536
530,536
530,536
538-540
690
Record inventories
572-584
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
577,582,585
577,582,585
577,582,585
577,582,585
587-589
690
Preparing For Accounting Competitive Events
9
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Calculate notes
receivable
595-596
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
606
606
606
606
608-610
Calculate notes payable
594-596
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
597,602
597,602
597,602
597,602
608-610
Record notes receivable 603-605
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
606
606
606
606
608-610
690
Record notes payable
598-601
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
602
602
602
602
608-610
690
Open a petty cash fund
141-143
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
144
144
144
144
146-148
Replenish a petty cash
fund
141-143, 465466
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
144,469
144,469
144,469
144,469
146-148,477481
449
520-523
Fitness Junction
Reinforcement Act. 3A
Preparing For Accounting Competitive Events
10
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Journalize opening a
petty cash fund
141-143
Work Together
On Your Own
Application Problem
144
144
146-148
Journalize replenishing
a petty cash fund
141-143, 465466
Terms Review
Work Together
On Your Own
Application Problem
Fitness Junction
Reinforcement Act. 3A
469
144,469
144,469
146-148,
477-481
449
520-523
Calculate interest due
595-596
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
606
606
606
606
608-610
Calculate interest
payable
594-596
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
597,602
597,602
597,602
597,602
608-610
Journalize transactions
involving notes payable
603-605
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
606
606
606
606
608-610
690
Journalize transactions
involving notes
receivable
598-601
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
602
602
602
602
608-610
690
Preparing For Accounting Competitive Events
11
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Calculate bad debts
expense
527
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
530
530
530
530
538-540
690
Journalize transactions
involving uncollectible
accounts
528, 531, 533,
534
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Putting Green Supply
530,536
530,536
530,536
530,536
538-540
690
Understand Different Forms of Business Organizations
Compare the various
forms of business
organizations, for
example,
proprietorship,
partnership,
corporation, and nonprofit organizations
6, 224, 454,
680
80, 254, 308,
364, 534, 564
Audit Understanding
Accounting in Your Career
Cases for Critical Thinking
Explore Accounting
Cases for Critical Thinking
2
Legal Issues in Accounting
Enrichment Activities Ch.
11, 17, 24
8,232,243,
459,665,668,
674,681
391
657
476
248
80, 254, 308,
364, 534, 564
267, 440, 627
List advantages of each
form of business
organization
List disadvantages of
each form of business
organization
6,226-228,
452-455
80, 254, 534,
564
6,226-228,
452-455
80, 254, 534,
564
Legal Issues in Accounting
Enrichment Activities Ch.
4, 11, 20
88, 267, 537
Legal Issues in Accounting
Enrichment Activities Ch.
4, 11, 20
88, 267, 537
Preparing For Accounting Competitive Events
12
Concept or
Procedure
Identify the various
accounting functions
involved with each
form of business
organization
Review Page
Number(s)
6, 57, 189-190,
226-228, 402406, 452-455,
636-638, 646651
Page
Number(s)
Apply and Practice
Audit Understanding
459
Explore Accounting
57, 407, 414417, 639, 652,
654-656
192, 413, 440,
510, 627, 653,
682
Enrichment Activities Ch.
8, 16, 17, 19, 24, 25, 26
CENTURY 21 ACCOUNTING, GENERAL JOURNAL
Concept or
Procedure
Describe the purpose of
accounting
Review Page
Number(s)
4-6,393,421
Apply and Practice
Applied Communications
Cases for Critical Thinking
3
Enrichment Activity Ch. 1
Page
Number(s)
172,189
214
16
Demonstrate the effects
of transactions on the
accounting equation,
for example, T
accounts
9-15,26-32,4056,69-70,7274,7680,110,128,13
1133,135,194,1
95,198-202
Audit Understanding
Application Problem
Work Together
15,29,44,56
17-20,33-36,
58-61
12,29,44,50,56
12,29,44 50,56
On Your Own
Understand the Accounting Cycle for a Service Business
Prepare a chart of
accounts
97-98
Audit Understanding
Work Together
On Your Own
Explore Accounting
Application Problem
Automated Accounting
Preparing For Accounting Competitive Events
100
100
100
112
113
116-117
13
Concept or
Procedure
Review Page
Number(s)
Apply information
from source documents
6668,109,122,25
5
Apply and Practice
Page
Number(s)
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Activity 1A
Fitness Junction
Putting Green Supply
71
71,75,81,85
71,75,81,85
87-90
145-147
457
692
Post general journal
entries
94-96,101-108
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
Foreign Exchange
105
105
113-114
145-147
217
Prepare a trial balance
151,204206,375,443447,642,667,6
81
Work Together
On Your Own
Application Problem
Reinforcement Activity 1B
Foreign Exchange
152
153
169-171
216
217
Calculate end-of-period
adjustments
154-157,192195
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
158
158
169-171
216
217
Record end-of-period
adjustments
155-167,192195
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
158
158
169-171
216
217
Update accounts
through adjusting
entries
192-195
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
196
196
211-213
216
217
Update accounts
through closing entries
197-202
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
203
203
211-213
216
217
Preparing For Accounting Competitive Events
14
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Prepare a post-closing
trial balance
204-210
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
209
209
209
212-213
216
217
Prepare financial
statements
174-184
Work Together
On Your Own
Application Problem
Reinforcement Act. 1B
Foreign Exchange
180,185
180,185
187-189
216
217
Understand the Accounting Cycle for a Merchandising Business
Contrast the
characteristics of a
service and a
merchandising business
6
222-455
Terms Review
Audit Understanding
Enrichment Activities Ch.
2,10,16
Enrichment Activities Ch.
2,10,16
8
8
32,244,421
244,421
Analyze transactions
relating to purchase of
merchandise
222-244,460478
Work Together
228,233,465,4
69,479
228,233,465,4
69,479
245248,268,481485,517-518
368-371
457
522-525
692
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
Analyze transactions
relating to the sale of
merchandise
252-263,490512
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
Preparing For Accounting Competitive Events
258,495,
500,505,511
258,264,495,
500,505,511
258,264,495,
500,505,511
266-268,513518
368-371
457
522-525
692
15
Concept or
Procedure
Record transactions in
special journals
Review Page
Number(s)
220265,342,347,3
56,358,460519,536537,548550,559,561562,600601,606,621,6
26,640
Apply and Practice
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
Prepare schedules for
subsidiary ledgers
280-281,288289,504
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
Preparing For Accounting Competitive Events
Page
Number(s)
228,233,258,2
64,343,348,35
9,465,469,474,
479,495,500,5
05,511,538,44
0,563,604,608,
622,628,641,4
95,
500,505,511
228,233,258,2
64,343,348,35
9,465,469,474,
479,495,500,5
05,511,538,44
0,563,604,608,
622,628,641,4
95,
500,505,511
258,264,495,
500,505,511
245-248,266268,361363,481485,513518,569570,610-612
368-371
457
522-525
692
282,290,505
282,290,505
304-307
368-371
457
522-525
692
16
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Generate trial balances
374-375
Work Together
On Your Own
Application Problem
Reinforcement 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
379
380
394
456
457
690-691
692
Generate end-of-period
adjustments
376-378,381384,429-433
618-627,642650,530531,556,616627
Work Together
379,385,433,5
32,558,622,62
8,647,683,686
380,385,433,5
32,558,622,62
8,647,683,686
394-396,540541,656-657
456
457
690-691
692
On Your Own
Application Problem
Reinforcement Act. 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
Prepare financial
statements
398-420
662-682
(Corporations)
Terms Review
Audit Understanding
Work Together
On Your Own
Application Problem
Reinforcement Act. 2B
Fitness Junction
Reinforcement Act. 3B
Putting Green Supply
Preparing For Accounting Competitive Events
404,415,420
404,409,415,
420
404,409,415,
420
404,409,415,
420
423-425,685687
456
457
690-691
692
17
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Perform Payroll and Banking Procedures
Compute gross pay
312-314
Work Together
On Your Own
Application Problem
Fitness Junction
315
315
331-334
457
Compute net pay
316-320,323325
Work Together
On Your Own
Application Problem
Fitness Junction
Putting Green Supply
326
3261
331-334
457
692
Compute employeepaid withholdings
316-320
Work Together
On Your Own
Application Problem
Fitness Junction
348
348
331-334
457
Compute payroll tax
expense forms
349-351
Work Together
On Your Own
Application Problem
353
353
362
Complete payroll tax
expense forms
354-357
Work Together
On Your Own
Application Problem
353,359
353,359
362
Compute salary
expenses
338-342
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Putting Green Supply
343,348
343,348
362
368-371
457
692
Prepare payroll
registers
322-323
Work Together
On Your Own
Application Problem
Fitness Junction
326
326
331-334
457
Record payroll
transactions in journals
340-342,345347,358-359
Work Together
On Your Own
Application Problem
Reinforcement Act. 2A
Fitness Junction
Reinforcement Act. 3A
Putting Green Supply
343,348,359
343,348,359
361-364
368-371
457
522-525
692
Preparing For Accounting Competitive Events
18
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Complete payroll tax
forms
349-352,354358
Work Together
On Your Own
Application Problem
353
353
362
Reconcile a bank
statement
125-127
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
Foreign Exchange
Fitness Junction
Putting Green Supply
129
129
140-142
145-147
217
457
692
Prepare commercial
bank deposits
120-122
Work Together
On Your Own
Fitness Junction
Putting Green Supply
124
124
457
692
Perform Specialized Accounting Procedures
Calculate depreciation
of plant assets
551-566
Work Together
On Your Own
Application Problem
Putting Green Supply
Record depreciation of
plant assets
551-566
Work Together
554,558,563,
567
554,558,563,
567
569-571
692
Application Problem
Putting Green Supply
558,563,
567
558,563,
567
569-571
692
On Your Own
Prepare depreciation
schedules
555-557
Work Together
On Your Own
Application Problem
558,567
558,567
569-571
Determine
uncollectible accounts
receivable
526-537
Work Together
On Your Own
Application Problem
Putting Green Supply
532
532
540-542
692
Record uncollectible
accounts receivable
526-537
Work Together
On Your Own
Application Problem
Putting Green Supply
532,538
532,538
540-542
692
Preparing For Accounting Competitive Events
19
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Record inventories
574-586
Work Together
On Your Own
Application Problem
579,584,587
579,584,587
589-591
Calculate notes
receivable
597-598,605609
Work Together
On Your Own
Application Problem
608
608
611-612
Calculate notes payable
596-598
Work Together
On Your Own
Application Problem
Putting Green Supply
599
599
610-612
692
Record notes receivable 605-6079
Work Together
On Your Own
Application Problem
Putting Green Supply
608
608
611-612
692
Record notes payable
600-603
Work Together
On Your Own
Application Problem
Putting Green Supply
604
604
610-612
692
Open a petty cash fund
135
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
138
138
141
145-147
Replenish a petty cash
fund
135-137,471472
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A,
2A, 3A
138,239,474
138,239,474
141,481482,484
145-147,368371,522-525
Work Together
On Your Own
Application Problem
Reinforcement Act. 1A
138
138
141
145-147
Journalize opening a
petty cash fund
135
Preparing For Accounting Competitive Events
20
Concept or
Procedure
Journalize replenishing
a petty cash fund
Review Page
Number(s)
137,234,471
Apply and Practice
Work Together
On Your Own
Application Problem
Fitness Junction
Reinforcement Act.1A, 2A
3A
Page
Number(s)
138,474
138,474
141142,481,484
457
145147,234,522525
Calculate interest due
597-598
Work Together
On Your Own
Application Problem
599
599
6110-612
Calculate interest
payable
597-598
Work Together
On Your Own
Application Problem
599
599
6110-612
Journalize transactions
involving notes payable
600-603
Work Together
On Your Own
Application Problem
Putting Green Supply
604
604
610-612
692
Journalize transactions
involving notes
receivable
605-6079
Work Together
On Your Own
Application Problem
Putting Green Supply
608
608
611-612
692
Calculate bad debts
expense
529
Work Together
On Your Own
Application Problem
532
532
540-542
Journalize transactions
involving uncollectible
accounts
526-537
Work Together
On Your Own
Application Problem
532,538
532,538
540-542
Preparing For Accounting Competitive Events
21
Concept or
Procedure
Review Page
Number(s)
Apply and Practice
Page
Number(s)
Understand Different Forms of Business Organizations
Compare the various
forms of business
organizations, for
example,
proprietorship,
partnership,
corporation, and nonprofit organizations
6-217,218457,462-689
Audit Understanding
List advantages of each
form of business
organization
6,80,220222,254,462,5
36,566
Enrichment Activities Ch.
4,11,20
86,265,539
List disadvantages of
each form of business
organization
6,80,220222,254,462,5
36,566
Enrichment Activities Ch.
4,11,20
86,265,539
Identify the various
accounting functions
involved with each
form of business
organization
6,57,183184,220222,410414,462,638640,648-653
Audit Understanding
Explore Accounting
Work Together
On Your Own
Application Problem
465
57
415
415
187-189,423425
186,421,448,5
12,629,655,68
4
Accounting in Your Career
Cases for Critical Thinking
Explore Accounting
Legal Issues in Accounting
Enrichment Activities Ch.
11,17,24
Enrichment Activities Ch.
8,16,17,19,24,25,26
Preparing For Accounting Competitive Events
8,465,667,670,
683
399
249,659
480
316,372,478,5
66
265,448,629
22
Accounting Terms
Click a letter to move to the terms that begin with that letter.
A
B
C
D
E
F
G
H
I
J
L
M
N
O
P
Q
R
S
T
U
V
W
Study Strategy
Print the pages that contain accounting terms. Place a sheet of paper over the terms in the
left column. Read a definition in the right column. Mentally note the term that matches
this definition. Slide the paper down the left column to see the correct answer.
When taking a test, you may see a term that is unfamiliar to you because you have
learned a different name for the same concept or procedure. Pay special attention to See
or Also Known As notes in the definitions that follow. These notes will help you learn
alternate names for terms.
A
Account
A record summarizing all the information pertaining to a
single item in the accounting equation
Account balance
The amount in an account
Account number
The number assigned to an account
Account title
The name given to an account
Accounting
Planning, recording, analyzing, and interpreting financial
information
Accounting cycle
The series of accounting activities included in recording
financial information for a fiscal period
Accounting equation
An equation showing the relationship among assets,
liabilities, and owner’s equity
Accounting period
See Fiscal period
Accounting records
Organized summaries of a business’s financial activities
Accounting system
A planned process for providing financial information that
will be useful to management
Accounts expenses
Expenses incurred in one fiscal period but not paid until a
later fiscal period
Accounts payable
Amount of money owed, or payable, to creditors
Accounts payable ledger
A subsidiary ledger containing only accounts for vendors
from whom items are purchased or bought on account
Preparing For Accounting Competitive Events
23
Accounts receivable
Money owed to a business
Accounts receivable ledger
A subsidiary ledger containing only accounts for charge
customers
Accounts receivable
turnover ratio
The number of times the average amount of accounts
receivable is collected during a specified period
Accrual basis of
accounting
The accounting method that records revenues when they
are earned and expenses when they are incurred
Accrued expenses
Expenses incurred in one fiscal period but not paid until a
later fiscal period
Accrued interest expense
Interest incurred but not yet paid
Accrued interest income
Interest earned but not yet received
Accrued revenue
Revenue earned in one fiscal period but not received until
a later fiscal period
Accumulated depreciation
The total amount of depreciation expense that has been
recorded since the purchase of a plant asset
Acid-test ratio
A ratio that shows the numeric relationship of quick assets
to current liabilities
Adjusting entries
Journal entries recorded to update general ledger accounts
at the end of a fiscal period
Adjustments
Changes recorded on a work sheet to update general
ledger accounts at the end of a fiscal period
Administrative expenses
budget schedule
A statement that shows the projected expenses for all
operating expenses not directly related to selling
operations
Aging accounts receivable
Analyzing accounts receivable according to when they are
due
Allowance
Reduces the amount of income tax to be withheld for an
employee
Allowance method of
recording losses from
uncollectible accounts
Crediting the estimated value of uncollectible accounts to
a contra account; also known as Allowance for Bad Debts
or Allowance for Doubtful Accounts
Amortization
Recognizing a portion of an expense in each of several
years
Appropriations
Authorizations to make expenditures for specified
purposes
Articles of incorporation
A written application requesting permission to form a
corporation
Preparing For Accounting Competitive Events
24
Assessed value
The value of an asset determined by tax authorities for the
purpose of calculating taxes
Asset
Anything of value that is owned
Auditing
The independent reviewing and issuing of an opinion on
the reliability of accounting records
Auditor
A person who examines the records that support the
financial records of a business to assure that generally
accepted accounting principles (GAAP) are being
followed
Authorized capital stock
Maximum number of shares of stock a corporation may
issue
Automatic check deposit
Depositing payroll checks directly to an employee’s
checking or savings account in a specific bank
Average number of days’
sales in merchandise
inventory
The period of time needed to sell an average amount of
merchandise inventory
Back to Index
B
Bad debts
See Uncollectible accounts
Balance sheet
A financial statement that reports assets, liabilities, and
owner’s equity on a specific date
Bank service charge
Fee a bank charges for maintaining bank records or related
services, such as bankcard or credit card fees, for a
depositor
Bank statement
A report of deposits, withdrawals, and bank balances sent
to a depositor by a bank
Bankcard
Card issued by a bank that can be used to withdraw cash
or make payments to businesses
Beginning inventory
Merchandise on hand at the beginning of a fiscal period
Bill of exchange
See draft
Bill of lading
A receipt signed by the authorized agent of a
transportation company for merchandise received that also
serves as a contract for the delivery of the merchandise
Blank endorsement
An endorsement consisting only of the endorser’s
signature
Board of directors
A group of persons elected by the stockholders to manage
a corporation
Preparing For Accounting Competitive Events
25
Bond
A printed, long-term promise to pay a specified amount on
a specific date and to pay interest at stated intervals
Bond issue
All the bonds representing the total amount of a loan
Bond sinking fund
An amount set aside to pay a bond issue when due
Book inventory
See Perpetual inventory
Book value
The difference between an asset’s account balance and its
related contra account balance
Book value of a plant asset
The original cost of a plant asset minus accumulated
depreciation
Book value of accounts
receivable
The difference between the balance of Accounts
Receivable and its contra account, Allowance for
Uncollectible Accounts
Book value per share
See Equity per share
Breakeven point
The amount of sales at which net sales is exactly the same
as total costs
Budget
A written financial plan of a business for a specific period
of time, expressed in dollars
Budget period
The length of time covered by a budget
Budgeted income
statement
A statement that shows a company’s projected sales, costs,
expenses, and net income
Budgeting
Planning the financial operations of a business
Business transaction
An event, such as buying or selling merchandise, that
causes a change in the assets, liabilities, or owner’s
equity/capital of a business
Back to Index
C
Capital
The account used to summarize the owner’s equity in a
business; also money supplied by investors, banks, or
owners of a business
Capital stock
Total shares of ownership in a corporation
Cash basis of accounting
The accounting method that records revenues when they
are received and expenses when they are paid
Cash budget
A statement that shows for each month or quarter a
projection of a company’s beginning cash balance, cash
receipts, cash payments, and ending cash balance
Preparing For Accounting Competitive Events
26
Cash discount
A deduction from the invoice amount, allowed by a
vendor to encourage early payment
Cash flows
The cash receipts and cash payments of a company
Cash over
A petty cash on hand amount that is more than a recorded
amount
Cash payments budget
schedule
Projected cash payments
Cash payments journal
A special journal used to record only cash payment
transactions
Cash receipts budget
schedule
Projected cash receipts
Cash receipts journal
A special journal used to record only cash receipt
transactions
Cash sale
A sale in which cash is received for the total amount of the
sale at the time of the transaction
Cash short
A petty cash on hand amount that is less than a recorded
amount
Certificate of deposit
A document issued by a bank as evidence of money
invested with the bank
Charge sale
See Sale on account
Chart of accounts
A list of accounts used by a business
Charter
The approved articles of incorporation
Check
A business form ordering a bank to pay cash from a bank
account
Check register
A journal used in a voucher system to record cash
payments
Checking account
A bank account from which payments can be ordered by a
depositor
Closing entries
Journal entries used to prepare temporary accounts for a
new fiscal period
Commercial invoice
A statement prepared by the seller of merchandise
addressed to the buyer, showing a detailed listing and
description of merchandise sold, including prices and
terms
Commission
Amount paid to an employee based on a percentage of
sales made by the employee
Common stock
Stock that does not give stockholders any special
preferences
Preparing For Accounting Competitive Events
27
Comparability
Accounting principle that allows the financial information
from one period (or business) to be compared to that of
another
Comparative income
statement
An income statement containing sales, cost, and expense
information for two or more years
Component percentage
The percentage relationship between one financial
statement item and the total that includes that item
Conservatism principle
Accounting guideline requiring accountants to choose the
safer, more conservative method from the acceptable
methods
Consignee
The person or business who receives goods on
consignment
Consignment
Goods that are given to a business to sell, but for which
title to the goods remains with the vendor
Consignor
The person or business who gives goods on consignment
Consistency principle
Consistent use of inventory costing methods to aid in
comparing financial reports from different periods
Contra account
An account that reduces a related account on a financial
statement
Contra balance
An account balance that is opposite the normal balance
Contract of sale
A document that details all the terms agreed to by seller
and buyer for a sales transaction
Contribution margin
Income determined by subtracting all variable costs from
net sales
Controlling account
An account in a general ledger that summarizes all
accounts in a subsidiary ledger
Corporation
An organization with the legal rights of a person and
which may be owned by many persons
Correcting entry
A journal entry made to correct an error in the ledger
Cost accounting
The determination and control of costs of a business
enterprise
Cost ledger
A ledger containing all cost sheets for products in the
process of being manufactured
Cost of goods sold
See Cost of merchandise sold
Cost of merchandise
The price a business pays for goods it purchases to sell
Cost of merchandise sold
The total original price of all merchandise sold during a
fiscal period; also known as cost of sales
Preparing For Accounting Competitive Events
28
Credit
An amount recorded on the right side of a T account
Credit card sale
A sale in which a credit card is used for the total amount
of the sale at the time of the transaction
Credit memorandum
A form prepared by the vendor showing the amount
deducted for returns and allowances
Credit terms
Time allowed for payment for a sale on account
Creditor
A person or organization to whom a liability is owed
Current assets
Cash and other assets expected to be exchanged for cash
or consumed within a year
Current liabilities
Liabilities due within a short time, usually within a year
Current ratio
A ratio that shows the numeric relationship of current
assets to current liabilities
Customer
A person or business to whom merchandise or services are
sold
Back to Index
D
Date of a note
The day a note is signed
Date of declaration
The date on which a board of directors votes to distribute
a dividend
Date of payment
The date on which dividends are actually to be paid to
stockholders
Debit
An amount recorded on the left side of a T account
Debit card
A bank card that, when making purchases, automatically
deducts the amount of the purchase from the checking
account of the cardholder
Debit memorandum
A form prepared by the customer showing the price
deduction taken by the customer for returns and
allowances
Debt ratio
The ratio found by dividing total liabilities by total assets
Declaring a dividend
Action by a board of directors to distribute corporate
earnings to stockholders
Declining-balance method
of depreciation
Multiplying the book value by a constant depreciation rate
at the end of each fiscal period
Deferred revenue
See Unearned revenue
Preparing For Accounting Competitive Events
29
Deficit
The amount by which allowances to partners exceed net
income
Departmental accounting
system
An accounting system showing accounting information
for two or more departments
Departmental margin
The revenue earned by a department less its cost of
merchandise sold and less its direct expenses
Departmental margin
statement
A statement that reports departmental margin for a
specific department
Departmental statement of
gross profit
A statement prepared at the end of a fiscal period showing
the gross profit for each department
Depletion
The decrease in the value of a plant asset because of the
removal of a natural resource
Depreciation expense
The portion of a plant asset’s cost that is transferred to an
expense account in each fiscal period during a plant
asset’s useful life
Direct expense
An operating expense identifiable with and chargeable to
the operation of a specific department
Direct labor
Salaries of factory workers who make a product
Direct materials
Materials that are of significant value in the cost of and
that become an identifiable part of a finished product
Direct write-off method of
recording losses from
uncollectible accounts
Recording uncollectible accounts expense only when an
amount is actually known to be uncollectible
Discount on capital stock
An amount less than par or stated value at which capital
stock is sold
Discount period
Time within which an invoice must be paid to receive a
discount
Dishonored check
A check that a bank refuses to pay
Dishonored note
A note that is not paid when due
Distribution of net income
statement
A partnership financial statement showing net income or
loss distribution to partners
Dividends
Earnings distributed to stockholders
Double-entry accounting
The recording of debit and credit parts of a transaction
Doubtful accounts
See Uncollectible accounts
Draft
A written, signed, and dated order from one party ordering
another party, usually a bank, to pay money to a third
party
Preparing For Accounting Competitive Events
30
Drawee
Bank on which a check is written
Drawer
Person or business on whose account a check is drawn
(money is paid from)
Back to Index
E
Earnings per share
The amount of net income belonging to a single share of
stock
Electronic funds transfer
A computerized cash payments system that uses electronic
impulses to transfer funds
Employee benefits
Payments to employees for non-working hours and to
insurance and retirement programs
Employee earnings record
A business form used to record details affecting payments
made to an employee
Encumbrance
A commitment to pay for goods or services that have been
ordered but not yet provided
Ending inventory
Merchandise on hand at the end of a fiscal period
Endorsement
A signature or stamp on the back of a check transferring
ownership
Endorsement in full
See Special endorsement
Entry
Information for each transaction recorded in a journal
Equities
Financial rights to the assets of a business
Equity per share
The amount of total stockholders’ equity belonging to a
single share of stock
Equity ratio
The ratio found by dividing stockholders’ equity by total
assets
Estimated salvage value
The amount an owner expects to receive when a plant
asset is removed from use; also called disposal value,
residual value, or scrap value
Ethics
The principles of right and wrong that guide an individual
in making decisions
Exhibit
See Supporting schedule
Expenditures
Cash disbursements and liabilities incurred for the cost of
goods delivered or services rendered
Preparing For Accounting Competitive Events
31
Expense
A decrease in owner’s equity resulting from the operation
of a business
Exports
Goods or services shipped out of a seller’s home country
to a foreign country
External controls
Measures and procedures provided outside a business to
protect cash and other assets
Back to Index
F
Face amount or face value
See Principal of a note
Factory overhead
All expenses other than direct materials and direct labor
that apply to the making of products
Federal unemployment tax A federal tax used for state and federal administrative
expenses of the unemployment program (FUTA – Federal
Unemployment Tax Act)
Fifo
See First-in, first-out inventory costing method
File maintenance
The procedure for arranging accounts in a general ledger,
assigning account numbers, and keeping records current
Financial accounting
The recording of a business’s financial activities and the
periodic preparation of financial reports
Financial claims
Legal rights to an item
Financial statements or
reports
Documents that summarize the state of a business on a
particular date (balance sheet) or changes resulting from
business transactions during a period (income statement)
Financing activities
Cash receipts and payments involving debt or equity
transactions
Finished goods
Manufactured products that are fully completed
Finished goods ledger
A ledger containing records of all finished goods on hand
First-in, first-out
inventory costing method
Using the price of merchandise purchased first to calculate
the cost of merchandise sold first
Fiscal period
The length of time for which a business summarizes and
reports financial information
Fiscal year
Accounting period of twelve months
Fixed assets
See Plant assets
Preparing For Accounting Competitive Events
32
Fixed costs
Total costs that remain constant regardless of change in
business activity
Full disclosure
Accounting guideline requiring that financial reports
provide complete information
Fund
A governmental accounting entity with a set of accounts
in which assets always equal liabilities plus equities
Back to Index
G
Gain on plant assets
Revenue that results when a plant asset is sold for more
than book value
General amount column
A journal amount column that is not headed with an
account title
General journal
A journal with two amount columns in which all kinds of
entries can be recorded
General ledger
A ledger that contains all accounts needed to prepare
financial statements
Goodwill
The value of a business in excess of the total investment
of owners
Gross earnings
See Total earnings
Gross pay
See Total earnings
Gross profit method of
estimating inventory
Estimating inventory by using the previous year’s
percentage of gross profit on operations
Gross profit on sales
The revenue remaining after cost of merchandise sold has
been deducted
Back to Index
H
Horizontal analysis
See Trend analysis
Back to Index
I
Imports
Goods or services bought from a foreign country and
brought into a buyer’s home country
Preparing For Accounting Competitive Events
33
Income
See Revenue
Income statement
A financial statement showing the revenue and expenses
for a fiscal period; also known as profit and loss statement
Income summary account
Account in the general ledger used to summarize the
revenue and expenses for a fiscal period
Indirect expense
An operating expense chargeable to overall business
operations and not identifiable with a specific department
Indirect labor
Salaries paid to factory workers who are not actually
making products
Indirect materials
Materials used in the completion of a product that are of
insignificant value to justify accounting for separately
Intangible assets
Assets of a non-physical nature that have value for a
business
Interest
An amount paid for the use of money for a period of time
Interest expense
The interest accrued on money borrowed
Interest income
The interest earned on money loaned
Interest rate of a note
The percentage of the principal that is paid for use of the
money
Interim departmental
statement of gross profit
A statement showing gross profit for each department for
a portion of a fiscal period
Internal auditor
See Auditor
Internal controls
Steps a business takes to protect cash and other assets
Inventory
Amount of goods on hand
Inventory record
Form used during a periodic inventory to record
information about each item of merchandise on hand
Investing activities
Cash receipts and cash payments involving the sale or
purchase of assets used to earn revenue over a period of
time
Invoice
Form describing the goods or services sold, the quantity,
and the price
Back to Index
J
Journal
Form for recording transactions in chronological order
Journalizing
Recording transactions in a journal
Preparing For Accounting Competitive Events
34
Back to Index
L
Last-in, first-out inventory
costing method
Using the price of merchandise purchased last to calculate
the cost of merchandise sold first
Ledger
A group of accounts
Letter of credit
A letter issued by a bank guaranteeing that a named
individual or business will be paid a specified amount,
provided stated conditions are met
Liability
An amount owed by a business
Lifo
See Last-in, first-out inventory costing method
Liquidation of a
partnership
The process of paying a partnership’s liabilities and
distributing remaining assets to the partners
Liquidity ratio
Measure of a business’s ability to pay its current debts as
they become due and to provide for unexpected needs for
cash
List price
A business’s printed or catalog price for products or
services
Long-term assets
See Plant assets
Long-term liabilities
Liabilities owed for more than a year
Loss on plant assets
The loss that results when a plant asset is sold for less than
book value
Lower of cost or market
inventory costing method
Using the lower of cost or market price to calculate the
cost of ending merchandise inventory
Back to Index
M
MACRS
See Modified Accelerated Cost Recovery System
Maker of a note
The person or business who signs a note and thus
promises to make payment
Management advisory
services
Management advice provided to an organization by a
private accountant
Managerial accounting
The analysis, measurement, and interpretation of financial
accounting information
Manufacturing business
Business that turns raw materials into finished products
Preparing For Accounting Competitive Events
35
Marginal income
See Contribution margin
Market value
The price at which a share of stock may be sold on the
stock market
Markup
The amount added to the cost of merchandise to establish
the selling price
Materials ledger
A ledger containing all records of materials
Maturity date of a note
The date a note is due
Maturity value
The amount that is due on the maturity date of a note
Medicare tax
A federal tax paid for hospital insurance
Memorandum
A form on which a brief message is written describing a
transaction
Merchandise
Goods that a merchandising business purchases to sell
Merchandise inventory
The amount of goods on hand for sale to customers
Merchandise inventory
turnover ratio
The number of times the average amount of merchandise
inventory is sold during a specific period of time
Merchandising business
A business that purchases and sells goods
Modified Accelerated Cost
Recovery System
A depreciation method required by the Internal Revenue
Service to be used for income tax calculation purposes for
most plant assets placed in service after 1986
Mutual agency
The right of all partners to contract for a partnership
Back to Index
N
Net income
The difference between total revenue and total expenses
when total revenue is greater
Net loss
The difference between total revenue and total expenses
when total expenses is greater
Net pay
The total earnings paid to an employee after payroll taxes
and other deductions
Net purchases
Total purchases less purchases discount and purchases
returns and allowances
Net sales
Total sales less sales discount and sales returns and
allowances
Nominal accounts
See Temporary accounts
Nonprofit organization
See Not-for-profit organization
Preparing For Accounting Competitive Events
36
No-par-value stock
A share of stock that has no authorized value printed on
the stock certificate
Normal balance
The side of the account that is increased
Note
See Notes payable
Notes payable
Promissory notes signed by a business and given to a
creditor
Notes receivable
Promissory notes that a business accepts from customers
Not-for-profit
organization
An organization providing goods or services with neither a
conscious motive nor expectation of earning a profit
NSF check
Check returned to the depositor by the bank because there
are not sufficient funds in the drawer’s account to cover
the check; also known as dishonored check
Number of a note
The number assigned to identify a specific note
Back to Index
O
Opening an account
Writing an account title and number on the heading of an
account
Operating activities
The cash receipts and payments necessary to operate a
business on a day-to-day basis
Operating budget
A plan of current expenditures and the proposed means
of financing those expenditures
Organization costs
Fees and other expenses of organizing a corporation
Other revenue and
expenses budget schedule
Budgeted revenue and expenses from activities other than
normal operations
Outstanding checks
Checks that have been written but have not yet been
presented to the bank for payment
Outstanding deposits
Deposits that have been made and recorded in the
checkbook or register but do not appear on the bank
statement
Overapplied overhead
The amount by which applied factory overhead is more
than actual factory overhead
Overhead
See Factory overhead
Owner’s equity
The amount remaining after the value of all liabilities is
subtracted from the value of all assets
Preparing For Accounting Competitive Events
37
Owners’ equity statement
A financial statement that summarizes the changes in
owners’ equity during a fiscal period
Back to Index
P
Par value
A value assigned to a share of stock and printed on the
stock certificate
Partner
Each member of a partnership
Partnership
A business in which two or more persons combine their
assets and skills
Partnership agreement
A written agreement setting forth the conditions under
which a partnership is to operate
Par-value stock
A share of stock that has an authorized value printed on
the stock certificate
Pay period
The period covered by a salary payment
Payee of a note
The person or business to whom the amount of a note is
payable
Payroll
The total amount earned by all employees for a pay period
Payroll register
A business form used to record payroll information
Payroll taxes
Taxes based on the payroll of a business
Percentage of net sales
method
Method of estimating uncollectible debts expense in
which a business assumes that a certain percentage of each
year’s net sales will be uncollectible
Performance report
A report showing a comparison of projected and actual
amounts for a specific period of time
Periodic inventory
A merchandise inventory determined by counting,
weighing, or measuring items of merchandise on hand
Permanent accounts
Accounts used to accumulate information from one fiscal
period to the next
Perpetual inventory
A merchandise inventory determined by keeping a
continuous record of increases, decreases, and balance on
hand
Personal financial
planning
Assisting individuals in managing their personal
investments
Personal property
All property not classified as real property
Preparing For Accounting Competitive Events
38
Petty cash
An amount of cash kept on hand and used for making
small payments
Petty cash slip
A form showing proof of a petty cash payment
Physical inventory
See Periodic inventory
Plant asset record
An accounting form on which a business records
information about each plant asset
Plant assets
Assets that will be used for a number of years in the
operation of a business
Post-closing trial balance
A trial balance prepared after the closing entries are
posted
Postdated check
A check with a future date on it
Posting
Transferring information from a journal entry to a ledger
account
Preferred stock
Stock that gives stockholders preference in earnings and
other rights
Prepaid expenses
Expenses paid in one fiscal period but not reported as
expenses until a later fiscal period
Price-earnings ratio
The relationship between the market value per share and
earnings per share of a stock
Principal of a note
The original amount of a note; sometimes referred to as
face amount of a note
Proceeds
Amount of cash actually received by a borrower on a noninterest-bearing note payable
Production-unit method of
depreciation
Calculating estimated annual depreciation expense based
on the amount of production expected from a plant asset
Profit
Amount of revenue earned above the expenses incurred to
operate the business
Profitability ratio
Ratios used to evaluate the earnings performance of a
business during an accounting period
Promissory note
A written and signed promise to pay a sum of money at a
specified time
Proprietorship
A business owned by one person
Proving cash
Determining that the amount of cash agrees with the
accounting records
Proving the ledger
Adding all debit balances and all credit balances of the
ledger accounts and then comparing the two totals to
determine whether they are equal
Preparing For Accounting Competitive Events
39
Purchase invoice
An invoice used as a source document for recording a
purchase on account transaction
Purchase order
A completed form authorizing a seller to deliver goods
with payment to be made later
Purchase requisition
Written request that a certain item be purchased
Purchases account
Account used to record the cost of merchandise purchased
during a fiscal period; also known as Merchandise
Purchases account
Purchases allowance
Credit allowed for part of the purchase price of
merchandise that is not returned, resulting in a decrease in
the customer’s accounts payable
Purchases budget schedule
A statement prepared to show the projected amount of
purchases that will be required during a budget period
Purchases discount
A cash discount on purchases taken by a customer
Purchases journal
A special journal used to record only purchases of
merchandise on account
Purchases return
Credit allowed for the purchase price of returned
merchandise, resulting in a decrease in the customer’s
accounts payable
Back to Index
Q
Quick assets
Those current assets that are cash or that can be quickly
turned into cash
Quick ratio
Ratio of short-term assets to current liabilities
Back to Index
R
Rate earned on average
stockholders’ equity
The relationship between net income and average
stockholders’ equity
Rate earned on average
total assets
The relationship between net income and average total
assets
Rate earned on net sales
The rate found by dividing net income after federal
income tax by net sales
Preparing For Accounting Competitive Events
40
Ratio
A comparison between two numbers showing how many
times one number exceeds the other
Real accounts
See Permanent accounts
Real estate
See Real property
Real property
Land and anything attached to the land
Realization
Cash received from the sale of assets during liquidation of
a partnership
Receipt
A business form giving written acknowledgement for cash
received
Reconciling a bank
statement
Process of determining any differences between a bank
statement and a check register balance
Relevance
Characteristic of accounting requiring that information be
relevant (important and related) to making business
decisions
Residual value
See Estimated salvage value
Responsibility accounting
Assigning control of business revenues, costs, and
expenses as a responsibility of a specific manager
Responsibility statements
Financial statements reporting revenue, costs, and direct
expenses under a specific department’s control
Restrictive endorsement
An endorsement restricting further transfer of a check’s
ownership
Retail merchandising
business
A merchandising business that sells to those who use or
consume the goods, also called a retailer
Retail method of
estimating inventory
Estimating inventory by using a percentage based on both
cost and retail prices
Retained earnings
An amount earned by a corporation and not yet distributed
to stockholders
Retiring a bond issue
Paying the amounts owed to bondholders for a bond issue
Return on sales
Ratio of sales dollars to profit (divide net income by sales)
Revenue
An increase in owner’s equity resulting from the operation
of a business; also called income
Revenue recognition
Accounting principle stating that revenue should be
recognized and recorded on the date earned, even if the
cash is received at a later date
Reversing entry
An entry made at the beginning of one fiscal period to
reverse an adjusting entry made in the previous fiscal
period
Preparing For Accounting Competitive Events
41
Back to Index
S
Salary
The money paid for employee services
Sale on account
A sale for which cash will be received at a later date
Sales
Revenue account used to record the amount of
merchandise sold
Sales allowance
Credit allowed a customer for part of the sales price of
merchandise that is not returned, resulting in a decrease in
the vendor’s accounts receivable
Sales budget schedule
A statement that shows the projected net sales for a budget
period
Sales discount
A cash discount on sales
Sales invoice
An invoice used as a source document for recording a sale
on account
Sales journal
A special journal used to record only sales of merchandise
on account
Sales mix
Relative distribution of sales among various products
Sales return
Credit allowed a customer for the sales price of returned
merchandise, resulting in a decrease in the vendor’s
accounts receivable
Sales slip
See Sales invoice
Sales tax
A tax on a sale of merchandise or services
Salvage value
See Estimated salvage value
Schedule of accounts
payable
A listing of vendor accounts, account balances, and total
amount due all vendors
Schedule of accounts
receivable
A listing of customer accounts, account balances, and total
amount due from all customers
Scrap value
See Estimated salvage value
Selling expenses budget
schedule
A statement prepared to show projected expenditures
related directly to the selling operations
Serial bonds
Portions of a bond issue that mature on different dates
Service business
A business that performs an activity for a fee
Share of stock
Each unit of ownership in a corporation
Preparing For Accounting Competitive Events
42
Sight draft
A draft payable on sight when the holder presents it for
payment
Social security tax
A federal tax paid for old-age, survivors, and disability
insurance
Sole proprietorship
See Proprietorship
Source document
A business paper from which information is obtained for a
journal entry
Special amount column
A journal amount column headed with an account title
Special endorsement
An endorsement indicating a new owner of a check
Special journal
A journal used to record only one kind of transaction
State unemployment tax
A state tax used to pay benefits to unemployed workers
(SUTA –State Unemployment Tax Act)
Stated-value stock
No-par-value stock that is assigned a value by a
corporation
Statement of cash flows
A statement that summarizes cash receipts and cash
payments resulting from business activities during a fiscal
period
Statement of changes in
owner’s equity
Financial report that summarizes the effects of business
transactions on the owner’s equity account
Statement of changes in
partner’s equity
Financial report that summarizes the effects of business
transactions on the partner’s equity account
Statement of cost of goods
manufactured
A statement showing details about the cost of finished
goods
Statement of retained
earnings
Reports the changes that have taken place in the Retained
Earnings account during a fiscal period
Statement of stockholders’
equity
A financial statement that shows changes in a
corporation’s ownership for a fiscal period
Stock certificate
Written evidence of the number of shares each stockholder
owns in a corporation
Stock ledger
A file of stock records for all merchandise on hand
Stock record
A form used to show the kind of merchandise, quantity
received, quantity sold, and balance on hand
Stockholder
An owner of one or more shares of a corporation
Stockholders’ equity
Value of the owners’ equity in a corporation
Straight-line method of
depreciation
Charging an equal amount of depreciation expense for a
plant asset in each year of useful life
Preparing For Accounting Competitive Events
43
Subscribing for capital
stock
Entering into an agreement with a corporation to buy
capital stock and pay at a later date
Subsidiary ledger
A ledger that is summarized in a single general ledger
account
Sum-of-the-years-digits
method of depreciation
Using fractions based on years of a plant asset’s useful life
Supplementary report
See Supporting schedule
Supporting schedule
A report prepared to give details about an item on a
principal financial statement
Back to Index
T
T account
An accounting device used to analyze transactions
Taking an inventory
See Periodic inventory
Tax accounting
The preparation of tax returns as well as tax planning
Tax base
The maximum amount of earnings on which a tax is
calculated
Tax levy
Authorized action taken by a governmental organization
to collect taxes by legal authority
Temporary accounts
Accounts used to accumulate information until it is
transferred to the owner’s capital account
Term
Length of time, as in how long a borrower has to repay a
debt
Term bonds
Bonds that all mature on the same date
Terms of sale
An agreement between a buyer and a seller about payment
for merchandise
Time card
Record of the time an employee arrives at work, the time
the employee leaves works, and the total hours worked for
the day
Time draft
A draft that is payable at a fixed or determinable future
time after it is accepted
Time of a note
The days, months, or years from the date of signing until a
note is to be paid
Total costs
All costs for a specific period of time
Total earnings
The total pay due for a pay period before deductions
Preparing For Accounting Competitive Events
44
Trade acceptance
A form signed by a buyer at the time of a sale of
merchandise in which the buyer promises to pay the seller
a specified sum of money, usually at a stated time in the
future
Trade discount
A reduction in the list price granted to customers
Transaction
A business activity that changes assets, liabilities, or
owner’s equity
Treasury stock
A corporation’s own stock that has been issued and
reacquired
Trend analysis
A comparison of the relationship between one item on a
financial statement and the same item on a previous fiscal
period’s financial statement
Trial balance
A proof of the equality of debits and credits in a general
ledger
Trustee
A person or institution, usually a bank, who is given legal
authorization to administer property for the benefit of
property owners
Back to Index
U
Uncollectible accounts
Accounts receivable that cannot be collected
Underapplied overhead
The amount by which applied factory overhead is less
than actual factory overhead
Unearned revenue
Revenue received in one fiscal period but not earned until
the next fiscal period
Unemployment taxes
Taxes collected to provide payments to people who are
temporarily out of work
Unit cost
An amount spent for one of a specific product or service
Back to Index
V
Variable costs
Total costs that change in direct proportion to a change in
the number of units
Vendor
A business from which merchandise is purchased or
supplies or other assets are bought
Vertical analysis
See Component percentage
Preparing For Accounting Competitive Events
45
Voucher
A business form used to show an authorized person’s
approval for a cash payment
Voucher check
A check with space for writing details about a cash
payment
Voucher jacket
See Voucher
Voucher register
A journal used to record vouchers
Voucher system
A set of procedures for controlling cash payments by
preparing and approving vouchers before payments are
made
Back to Index
W
Wage
Amount of money paid to an employee at a specified rate
per hour worked
Weighted-average
inventory costing method
Using the average cost of beginning inventory plus
merchandise purchased during a fiscal period to calculate
the cost of merchandise sold
Wholesale merchandising
business
A business that buys and resells merchandise to retail
merchandising businesses, also called a wholesaler
Withdrawals
Assets taken out of a business for the owner’s personal
use; also known as Drawing or Drawing account
Withholding allowance
A deduction from total earnings for each person legally
supported by a taxpayer, including the employee
Work in process
Products that are being manufactured but are not yet
complete
Work sheet
A columnar accounting form used to summarize the
general ledger information needed to prepare financial
statements
Working capital
The amount of total current assets less total current
liabilities
Writing off an account
Canceling the balance of a customer account because the
customer does not pay
Back to Index
Preparing For Accounting Competitive Events
46