EXAM Review Terms final

Exam Review
Chapter 1: Accounting and Business
 accounting
 types of business (service, merchandising, manufacturing, non-profit)
 forms of business ownership (sole proprietorship, partnership, corporation)
 auditing
 Canadian Institute of Chartered Accountants
 CICA Handbook
Chapter 2: The Balance Sheet
 asset
 liability
 owner’s equity (capital, net worth)
 balance sheet
 accounts receivable
 debtor
 accounts payable
 creditor
 liquidity
 accounting principles (GAAP)
o business entity concept
o continuing concern concept
o principle of conservatism
Chapter 3: Analyzing Changes in Financial Position
 business transaction
 source document
 accounting principle GAAP - objectivity principle
Chapter 4: The Simple Ledger
 account
 ledger
 t-accounts
 debit/credit
 accounting entry
 double entry system of accounting
 account balance
 exceptional account balance
 trial balance
Chapters 5 and 6: Expanded Ledger/The Journal and Source Documents
 equity accounts - capital, drawings, revenue, expense
 income statement
 fiscal period
 chart of accounts
 trial balance
 Source Documents:
o cash sales slip
o sales invoice
o purchase invoice
o cheque copy
o cash receipts daily summary
o bank debit advice
o bank credit advice
o others…bank statement, credit card statement, memorandum…
serially prenumbered documents
accounting principle - cost principle
Sales Tax:
o goods and services tax (GST)
o harmonized sales tax (HST)
o remitting GST to the government
o input tax credit
o contra account
buying and selling on credit/on account
generally accepted principles
o time period concept
o revenue recognition principle
o matching principle
journal (book of original entry)
two-column general journal
journal entry
Chapter 7
 posting
 cross-referencing
 accounting cycle
 trial balance out of balance
o shortcuts in detecting a single error
 transposition error
Chapter 8
 work sheet
 accounts receivable control account
 accounts payable control account
 income statement
 balance sheet formats
o account form balance sheet
o report form balance sheet
 classified balance sheet - current assets, fixed assets (or plant and equipment), current
liabilities, long-term liabilities, owner’s equity
 accountability
o users of financial statements
o audit
 accounting principles
o full disclosure principle
o consistency principle
o materiality principle
 comparing financial data
o trend analysis
o common size statements
Chapter 9: Completing the Accounting Cycle
 Adjusting Entries
Types of adjustments
o late purchase invoices
o supplies
o prepaid expense
o depreciation
 straight line method
 declining balance method
accumulated depreciation
net book value
contra account
Closing entries
o real accounts/permanent accounts
o nominal accounts/temporary accounts
o closing an account
o income summary account
Accounting cycle
o matching principle
o materiality principle
o consistency principle
o full disclosure principle
Chapter 10: Cash Control and Banking
 internal control
 bank reconciliation statement
Chapter 11: Accounting for a Merchandising Business
 merchandise inventory
 inventory methods
o periodic inventory method
o perpetual inventory method
 physical inventory
 purchases account
 freight-in account
 calculating cost of goods sold
 gross profit
 closing entries
 credit invoice
 sales returns and allowances
 purchases returns and allowances
 discounts for early payment – discounts allowed and discounts earned, terms of sale
 inventory shrinkage
Chapter 12: Modifying Accounting Systems
 subsidiary ledger
Chapter 13: Business Organization and Decision-Making
 partnerships
 advantages and disadvantages of partnerships
partnership agreement
share certificate / stock certificate
common shareholders
limited liability
board of directors
advantages and disadvantages of corporations
public corporations
private corporations
capital stock
retained earnings
apportionment of net income or net loss for a partnership
o salaries
o interest
o income or loss sharing ratio
common stock
preferred stock
statement of distribution of net income
statement of partners’ capital
ratio and percentage analysis
o current ratio
o quick ratio
o accounts receivable collection period
o inventory turnover
o debt ratio
o equity ratio
o rate of return on sales
o rate of return on shareholders’ equity
o times interests earned ratio
o earnings per share
o price earnings ratio