Inside EZ Accounting
you will find a glossary of accounting and financial terms
for a profit company as well as a glossary of accounting terms
for non-profit organizations, state and local governments,
and college and universities. The accounting terms are in
alphabetical order and are easy to read. Also, in EZ Accounting, you will learn how to record accounting transactions
in two formats. One is the account type format with full explanation
of why it is debited and why it is credited. The other is
the "T-Account" format. "T-Accounts" are used to
better understand debits and credits. There is also a "T-Account"
calculator!!
For your preview, we have opened
these links to the user only section of our site, the rest
of this information can only be accessed if you sign up.
Recording Debits & Credits
More Info
Example 1
(there are over 80 different debit/credit
transactions)
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Transaction:
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The
entity purchased $2,500 of supplies on account. |
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Account:
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Current
Liabilities |
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Description:
|
Accounts
Payable |
|
Affects
Balance Sheet:
|
Yes |
|
Affects
Income Statement:
|
Yes |
| The
balance in the
Accounts Payable account
is a Credit. |
| Debit
Accounts Affected |
Debit
Amt(s)
|
Debit
Account |
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Debit:
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2,500.00
|
Supplies
Expense |
| Credit
Accounts Affected |
Credit
Amt(s)
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Credit
Account |
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Credit:
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2,500.00
|
Accounts
Payable |
| Full
Explanation: |
| Supplies
expense is debited because the entity purchased supplies.
Accounts payable is credited because the supplies were purchased
on account (charged). |
Examples of Accounting Terminology
Glossary Of Accounting And Financial
Terms For A Profit Company
Accounting Equation
- The accounting equation is assets
= liabilities + owner's equity. This
equation is the basis of a balance sheet.
Accounts Payable
- It is also called A/P.
Accounts payable are the bills a business
owes to suppliers.
Accounts Receivable
- It is also called A/R.
Accounts receivable are the amounts owed
to a company by its customers.
Accrual Basis Of Accounting
-
Accrual basis of accounting is based upon
generally accepted accounting principles...
More accounting terminology, Purchase
Now
Glossary Of Accounting Terms
For Non-Profit Organizations, State And
Local Governments, And Colleges And Universities
Accounting Equation
- The equation is as follows:
assets=liabilities+net assets.
The equation
is the basis of a statement
of financial position for a non-profit
organization. The equation
for a balance
sheet of a state and local government
and a college and university is: assets=liabilities+fund
equity or fund balance.
Accounts Payable
- It is also called A/P.
Accounts payable are the bills a non-profit
organization or a municipality or a college and university
owes to suppliers.
Accounts Receivable
- It is also called A/R.
Accounts receivable are the amounts owed
to a non-profit or a municipality or a college and university
by its customers. A municipality has customers in their
enterprise fund activity. A college and university has customers
in their auxiliary enterprise activity.
- More accounting terminology, Purchase
Now
Recording and Posting Accounting Transactions
Debit and Credit
In order to record an accounting transaction,
it is necessary to make a debit
and a credit. An accounting transaction
cannot occur
without a debit and credit!
It is an incomplete entry and the transaction
is out of balance.
Recording Accounting
Transactions - Examples below. Paid
users get them all.
To illustrate the debiting
and crediting
of accounts, please review the transactions
of John F. Smith, a sole proprietor, doing business as XYZ Company.
Please analyze each transaction to see what increases
and decreases
occurred, and observe the debit
and credit
entries which record these increases
and decreases.
T-Accounts are being used and only the amounts
of debits and
credits are
shown. As stated earlier the asset
accounts and expense
accounts are shown at the left;
liability, owner's equity and
revenue accounts are
shown at the right.
1) Merchandise was sold to a customer
for $5,900 on account.
The accounts
receivable asset is increased
because the customer owes the company for
the merchandise it received - debit
accounts receivable.
The revenue
account is increased
because the company generated sales of $5,900
by selling merchandise to a customer - credit
sales.
Accounts
Receivable
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$5900
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 |
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2) John F. Smith contributed capital
of $5,000 for working capital.
The cash asset
is increased because
cash was put into the business by the sole proprietor - debit
cash.
The owners' equity is
increased because
John F. Smith contributed
$5,000 in working capital to his business - credit
capital.
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John
F. Smith, Capital
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$5000
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BALANCE SHEET See Examples
1-4 illustrating a sample balance sheet for each type of entity.
INCOME STATEMENT See
Examples 1-4 illustrating a combined income statement for each
type of entity.
CASH FLOW STATEMENT See
Examples 1-4 illustrating a cash flow statement for each type
of entity.
- Example 1 - Sole Proprietorship
- Example 2 - Partnership
- Example 3 - Corporation
- Example 4 - Non-Profit
- Example 5 is a work sheet that will assist
you to better understand the increases or decreases in cash
flow.
Your own cash flow statement - Interactive,
calculating work sheet to compute your own cash flow!
- Calculator 1 - Cash Flow Statement
NOTES TO A FINANCIAL STATEMENT
- Example 1 illustrates examples of notes to
a financial statement.
Reports Prepared by a Certified Public Accountant
Only four basic types of reports will be included
here. There are many other modifications of these reports that
are very complex that will not be discussed.
COMPILATION REPORTS
This is an accountant's report. Most small business owners use
this type of accountant's report.
- Example 1 - shows an example of a compilation
report with notes.
- Example 2 - shows an example of a compilation
report without notes.
REVIEW ACCOUNTANT'S REPORT
- Example 1 shows an example of a review report.
INDEPENDENT AUDITOR'S REPORT
- Example 1 - shows an example of an independent
auditor's report.
RATIOS
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