4/29/26, 8:40 PM Definitions of Accounting Terms Test and Flashcards
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Definitions of Accounting Terms
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Account
A record that holds the results of financial transactions.
Accountant's Equation
The equation that is the basis of the Balance Sheet:Assets = Liabilities + Owners' Equity.
Accounting
A service that oversees, measures, and evaluates financial information for decision making purposes.
Accounts Payable
Amounts due from your business to your creditors. Generally these are short term liabilities (30-120 days), and are shown under the
Current Liabilities section in the Balance Sheet.
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, 4/29/26, 8:40 PM Definitions of Accounting Terms Test and Flashcards
Accounts Receivable
Amounts due to your business from your customers. Generally these amounts are short term receivables (30-120 days), and are
shown under Current Assets section in the Balance Sheet.
Accounts Receivable Turnover
A measure used to determine a company's average collection period for receivables. Usually computed by dividing net sales (or net
credit sales) by average accounts receivable.
Accrual Basis Accounting
The practice of bookkeeping when income is recorded when earned and expenses are recorded when they are incurred.
Aging Schedule
A schedule showing the length of time an invoice has been outstanding or held. Aging schedules are normally created for Accounts
Payable and Accounts Receivable. For example, an aging schedule for accounts receivable can show how many days an invoice has
been outstanding. Aging schedules can also be created for inventory.
Amortization
The gradual and periodic reduction of an amount over time. It can apply to either the periodic write-down of an asset (see
depreciation) or a gradual extinguishment of a debt (payments reducing loan principal).
Annual Percentage Rate (APR)
Also known as effective annual rate, is used to put investments with varying interest compounding periods (daily, monthly,
semiannually) on a common basis. It is computed as follows: APR = (1 + r/m) m - 1.0 where r = the stated, nominal, or quoted rate,
and m = the number of compounding periods per year.
Annual Report
A report prepared by a business entity at the end of its calendar or fiscal year. It presents a company's financial position and
operating results for use by interested parties, including potential investors, creditors, stockholders, and employees.
Arm's-Length Transaction
Business dealings between independent and rational parties who are looking out for their own interests.
Assets
Economic resources owned or controlled by a person or company.
Audit
The result of an independent accountant's review of the financial statements and their footnotes to ensure compliance with generally
accepted accounting
principles (GAAP) and to express an opinionon the fairness of the financial statements.
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129 cards
Definitions of Accounting Terms
Long Term Learning
Spaced Repetition
Add to Long Term Learning Desk
Fast learning
Repeat this set of flashcards
Account
Preview Match
Test
Spell
Show all Review
Account
A record that holds the results of financial transactions.
Accountant's Equation
The equation that is the basis of the Balance Sheet:Assets = Liabilities + Owners' Equity.
Accounting
A service that oversees, measures, and evaluates financial information for decision making purposes.
Accounts Payable
Amounts due from your business to your creditors. Generally these are short term liabilities (30-120 days), and are shown under the
Current Liabilities section in the Balance Sheet.
Preview Fast learning Long Term Learning
https://studylib.net/flashcards/set/definitions-of-accounting-terms_188775 1/14
, 4/29/26, 8:40 PM Definitions of Accounting Terms Test and Flashcards
Accounts Receivable
Amounts due to your business from your customers. Generally these amounts are short term receivables (30-120 days), and are
shown under Current Assets section in the Balance Sheet.
Accounts Receivable Turnover
A measure used to determine a company's average collection period for receivables. Usually computed by dividing net sales (or net
credit sales) by average accounts receivable.
Accrual Basis Accounting
The practice of bookkeeping when income is recorded when earned and expenses are recorded when they are incurred.
Aging Schedule
A schedule showing the length of time an invoice has been outstanding or held. Aging schedules are normally created for Accounts
Payable and Accounts Receivable. For example, an aging schedule for accounts receivable can show how many days an invoice has
been outstanding. Aging schedules can also be created for inventory.
Amortization
The gradual and periodic reduction of an amount over time. It can apply to either the periodic write-down of an asset (see
depreciation) or a gradual extinguishment of a debt (payments reducing loan principal).
Annual Percentage Rate (APR)
Also known as effective annual rate, is used to put investments with varying interest compounding periods (daily, monthly,
semiannually) on a common basis. It is computed as follows: APR = (1 + r/m) m - 1.0 where r = the stated, nominal, or quoted rate,
and m = the number of compounding periods per year.
Annual Report
A report prepared by a business entity at the end of its calendar or fiscal year. It presents a company's financial position and
operating results for use by interested parties, including potential investors, creditors, stockholders, and employees.
Arm's-Length Transaction
Business dealings between independent and rational parties who are looking out for their own interests.
Assets
Economic resources owned or controlled by a person or company.
Audit
The result of an independent accountant's review of the financial statements and their footnotes to ensure compliance with generally
accepted accounting
principles (GAAP) and to express an opinionon the fairness of the financial statements.
Preview Fast learning Long Term Learning
https://studylib.net/flashcards/set/definitions-of-accounting-terms_188775 2/14
