Accounting Terminologies
Cash
Money in hand and money deposited in banks
Internal Control
Policies and procedures designed to protect assets
Cash Receipts
Money received by a business
Cash Payments
Money paid out by a business
Segregation of Duties
Separating responsibilities to reduce fraud
Authorization
Approval before a transaction is carried out
Physical Control
Safeguarding assets physically | safes, locks
Fraud
Intentional deception for financial gain
Money in hand and money deposited in banks
Internal Control
Policies and procedures designed to protect assets
Cash Receipts
Money received by a business
Cash Payments
Money paid out by a business
Segregation of Duties
Separating responsibilities to reduce fraud
Authorization
Approval before a transaction is carried out
Physical Control
Safeguarding assets physically | safes, locks
Fraud
Intentional deception for financial gain
Bank Reconciliation
A statement that explains differences between bank balance and cash book balance
Cash Book
Business record of cash and bank transactions
Bank Statement
Statement issued by the bank showing account activity
Deposits in Transit
Cash recorded by the business but not yet by the bank
Outstanding Cheques
Cheques issued but not yet cleared by the bank
Bank Charges
Fees deducted by the bank
Direct Deposit
Money paid directly into the bank by customers
Errors
Mistakes in bank or cash records
A statement that explains differences between bank balance and cash book balance
Cash Book
Business record of cash and bank transactions
Bank Statement
Statement issued by the bank showing account activity
Deposits in Transit
Cash recorded by the business but not yet by the bank
Outstanding Cheques
Cheques issued but not yet cleared by the bank
Bank Charges
Fees deducted by the bank
Direct Deposit
Money paid directly into the bank by customers
Errors
Mistakes in bank or cash records
Petty Cash
Small amounts of cash kept for minor business expenses
Petty Cashier
Person responsible for petty cash
Imprest System
Petty cash system where a fixed float is maintained
Non-Imprest System
Petty cash system with no fixed balance
Petty Cash Voucher
Document used to record petty cash payments
Replenishment
Restoring petty cash to its original amount
Float
Fixed amount of money assigned to petty cash
Minor Expenses
Small, routine business costs
Small amounts of cash kept for minor business expenses
Petty Cashier
Person responsible for petty cash
Imprest System
Petty cash system where a fixed float is maintained
Non-Imprest System
Petty cash system with no fixed balance
Petty Cash Voucher
Document used to record petty cash payments
Replenishment
Restoring petty cash to its original amount
Float
Fixed amount of money assigned to petty cash
Minor Expenses
Small, routine business costs
Accounts Receivable
Amounts owed to the business by customers
Credit Sale
Sale where payment is received later
Debtor
Customer who owes the business
Trade Receivable
Receivable arising from normal business operations
Credit Terms
Conditions for payment | e.g., n/30
Subsidiary Ledger
Detailed record of individual customer accounts
Control Account
Summary account in the general ledger
Collection
Process of collecting amounts due from customers
Amounts owed to the business by customers
Credit Sale
Sale where payment is received later
Debtor
Customer who owes the business
Trade Receivable
Receivable arising from normal business operations
Credit Terms
Conditions for payment | e.g., n/30
Subsidiary Ledger
Detailed record of individual customer accounts
Control Account
Summary account in the general ledger
Collection
Process of collecting amounts due from customers
Notes Receivable
Written promises to receive a specific amount of money in the future
Promissory Note
A formal written promise to pay
Maker
Person who signs and promises to pay the note
Payee
Person or business receiving payment
Principal
Original amount of the note
Interest
Cost of borrowing money
Maturity Date
Date when the note is due
Term
Length of time of the note
Written promises to receive a specific amount of money in the future
Promissory Note
A formal written promise to pay
Maker
Person who signs and promises to pay the note
Payee
Person or business receiving payment
Principal
Original amount of the note
Interest
Cost of borrowing money
Maturity Date
Date when the note is due
Term
Length of time of the note
Aging of Accounts Receivable
A schedule that classifies receivables based on how long they have been outstanding
Current
Amounts not yet overdue
Past Due
Amounts outstanding beyond the credit period
Net Realizable Value
Accounts Receivable minus Allowance for Doubtful Accounts
Estimated Uncollectible
Portion of receivables expected not to be collected
A schedule that classifies receivables based on how long they have been outstanding
Current
Amounts not yet overdue
Past Due
Amounts outstanding beyond the credit period
Net Realizable Value
Accounts Receivable minus Allowance for Doubtful Accounts
Estimated Uncollectible
Portion of receivables expected not to be collected
Accounts Payable
Amounts a business owes to suppliers for goods or services bought on credit
Creditor
Person or business to whom money is owed
Trade Payables
Another name for accounts payable
Credit Purchase
Buying goods or services with payment to be made later
Current Liability
A liability due within one year
Invoice
A bill received from a supplier
Due Date
Date by which payment must be made
Amounts a business owes to suppliers for goods or services bought on credit
Creditor
Person or business to whom money is owed
Trade Payables
Another name for accounts payable
Credit Purchase
Buying goods or services with payment to be made later
Current Liability
A liability due within one year
Invoice
A bill received from a supplier
Due Date
Date by which payment must be made
Notes Payable
Written promises to pay a specific amount at a future date
Promissory Note
A formal written agreement to repay borrowed money
Principal
Original amount borrowed
Interest
Cost of borrowing money
Maturity Date
Date the note must be repaid
Interest Rate
Percentage charged on the principal
Current Liability
Payable within one year
Long-Term Liability
Payable after one year
Written promises to pay a specific amount at a future date
Promissory Note
A formal written agreement to repay borrowed money
Principal
Original amount borrowed
Interest
Cost of borrowing money
Maturity Date
Date the note must be repaid
Interest Rate
Percentage charged on the principal
Current Liability
Payable within one year
Long-Term Liability
Payable after one year
Simple Interest
Interest calculated on the principal only
Principal
Original amount borrowed or lent
Interest Rate
Percentage charged on principal
Interest
Cost of borrowing money
Time Period
Length of time the loan is outstanding
Interest Expense
Cost of borrowing money
Interest Payable
Accrued interest not yet paid
Amortization
Gradual repayment of a loan over time
Amortization Schedule
Table showing principal, interest, and balance per period
Interest calculated on the principal only
Principal
Original amount borrowed or lent
Interest Rate
Percentage charged on principal
Interest
Cost of borrowing money
Time Period
Length of time the loan is outstanding
Interest Expense
Cost of borrowing money
Interest Payable
Accrued interest not yet paid
Amortization
Gradual repayment of a loan over time
Amortization Schedule
Table showing principal, interest, and balance per period
Credit Policy
Rules set by a business for granting credit to customers
Credit Sale
Sale where payment is made at a later date
Accounts Receivable
Amounts owed by customers
Credit Period
Time allowed for customers to pay
Credit Limit
Maximum credit allowed to a customer
Collection Policy
Procedures for collecting overdue debts
Bad Debts
Receivables that are unlikely to be collected
Cash Flow
Movement of cash into and out of a business
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Rules set by a business for granting credit to customers
Credit Sale
Sale where payment is made at a later date
Accounts Receivable
Amounts owed by customers
Credit Period
Time allowed for customers to pay
Credit Limit
Maximum credit allowed to a customer
Collection Policy
Procedures for collecting overdue debts
Bad Debts
Receivables that are unlikely to be collected
Cash Flow
Movement of cash into and out of a business
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