ASIAN INSTITUTE OF COMPUTER STUDIES San Fernando Branch

GLOSSARY Account is a formal record that represents, in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims Accounting is the recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the FINANCIAL STAT ! NTS Accounting equation is assets e"ual#s lia$ilities plus e"uity% &A ' L ( ) Accounting period/year is a period of *+ consecutive months chosen $y an entity as its ACC,-NTIN. period which may or may not $e a calendar year% Accounts Payable is the amount owed to a C/ 0IT,/ for delivered goods or completed services Accounts receivable are amounts collecti$le from its customers% It is the claim against a 0 1T,/ for an uncollected amount, generally from a completed transaction of sales or services rendered% Adjusting journal entries are accounting entries to account for a periods change, omissions or other financial data re"uired to $e reported 2in the $oo3s2 Adjusted Trial Balance reflects totals after the ad4usting entries are posted to the general ledger% Asset represents future $enefit to the company with relia$le measurement Accounting Manual is a document prepared to provide $oo33eepers with direction and guidance in connection with those $oo33eeping re"uirements of entities Balance is the Sum of 0 1IT entries minus the S-! of C/ 0IT entries in an ACC,-NT% If positive, the difference is called a 0 1IT 1ALANC 5 if negative, a C/ 0IT 1ALANC Balance Sheet reports the financial position at a point in time &end of the "uarter or year)% Bookkeeping is the recording of all financial transactions underta3en $y a $usiness &or an individual)% A bookkeeper &or $oo363eeper), sometimes called an accounting

cler3 in the is a person who keeps the books of an organization% The organization might $e a $usiness, a charity or even a local sports clu$ Business is the social science of managing people to organize and maintain collective productivity toward accomplishing particular productive goals, which is usually to generate profit Capital is called e"uity% Cashusually refers to money in the form of liquid currency, such as banknotes or coins. Cash Payments ournal is a $oo3 used to record all payments made in cash such as for accounts paya$le, merchandise purchases, and operating e7penses5 also termed cash disbursements journal Cash !eceipts ournals is a $oo3 used to record all collections made in cash such as for accounts receiva$le , merchandise sold, and interest income% Chart o" Accounts is a systematic listing of all accounts used $y an entity% Closing entries are prepared after the financial statements have $een completed% Corporation 6 is a form of doing $usiness pursuant to a charter granted $y government% Credit &cr) 6 means an entry to the right hand side of an account% ntry on the right side of a 0,-1L 6 NT/8 1,,99 :IN. system that represents the reduction of an ASS T or e7pense or the addition to a LIA1ILIT8 or / ; N- % &See 0 1IT%) #ebit &dr) 6 means an entry to the left hand side of an account% ntry on the left side of a 0,-1L 6 NT/8 1,,99 :IN. system that represents the addition of an ASS T or e7pense or the reduction to a LIA1ILIT8 or / ; N- % &See C/ 0IT%) #epreciation is the process of allocating the cost of property, plant and e"uipment assets to the periods that will $enefit from its use #ividend income is income received from ownership shares in a corporation% A dividend is a distri$ution to a corporations stoc3holders usually in cash5 #ocuments are $ases of recording transactions in $oo33eeping% This may include $ut not limited to sales invoice and official receipts% #ra$ing is when a $usiness proprietor draws money for personal needs %quity represents the residual claims of owners %&penses represent the outflow of assets &or increases in lia$ilities) due to a company#s operating activities%

'inancial statements report the $usiness activities during the year and the financial condition at the end of the year% It is also the presentation of financial data including 1ALANC S< TS, INC,! STAT ! NTS and STAT ! NTS ,F CAS< FL,=, or any supporting statement that is intended to communicate an entity>s financial position at a point in time and its results of operations for a period then ended% (enerally accepted accounting standards &.AA:) determine what to record, when to record, and amount to record% It is also the rules, and procedures necessary to define accepted accounting practice at a particular time% (eneral ournal is the most $asic of 4ournals% It is a chronological list of transactions% General Ledger is the collection of all ASSET, LIABILITY, owners E !ITY, "E#E$!E, and e%&ense accounts. This is a book of accounts in which data from transactions recorded in 'ournals are &osted and thereby classified and summari(ed. Also called )led*er+. )ncome is the inflow of / ; N- during a period of time% This also money received $y a person or organization $ecause of effort &wor3), or from return on investments% )ncome Statement shows the components of net income in detail% It is the summary of the effect of / ; N- S and e7penses over a period of time% )ncome Ta&es Payable is income ta7es due including current portion of deferred ta7es% )nterest )ncome includes amounts from interest on all interest6$earing deposits and accounts% )nternal Control is the process designed to provide reasona$le assurance regarding achievement of various management o$4ectives such as the relia$ility of financial reports% )nventories are products on hand for sale to customers% ournal is a $oo3 where all transactions are initially recorded% ournal entry is the logging of $usiness transactions and their monetary value into the t6accounts of the accounting 4ournal as either de$its or credits% A 4ournal entry is usually $ac3ed up with a piece of paper5 a receipt, a $ill, an invoice, or some other direct record of the transaction5 ma3ing them easy to record and to maintain tracea$ility for each transaction% ournali*e transactions is the process of recording a $usiness transaction in a 4ournal% +edger is a tool used for classifying and summarizing information a$out increases, decreases, and $alances of items in the chart of accounts%

+iability represents o$ligations, paya$les or de$ts owed% 0 1TS or o$ligations owed $y one entity &0 1T,/) to another entity &C/ 0IT,/) paya$le in money, goods, or services +oans Payable is the account title used to record amounts to $e paid for $orrowed money% This is also called Notes :aya$le% ,otes Payable is the account title used to record amounts to $e paid for $orrowed money and evidenced $y a promissory note% This is also called Loans :aya$le% -""icial receipts are a document issued to ac3nowledge receipt of cash% Partnership is a form of entity with two or more owners% /elationship $etween two or more persons $ased on a written, oral, or implied agreement where$y they agree to carry on a trade or $usiness for profit and share the resulting profits% Philippine 'inancial !eporting Standards often 3nown as :F/S are a set of accounting standards% They are issued $y the Financial /eporting Standards Council% ?F/SC@% Post Closing Trial Balance is $alance sheet in trial $alance form% Preliminary Trial Balance is a listing of the accounts in the general ledger and their $alances as of a specified date% A trial $alance is usually prepared at the end of an accounting period and is used to see if additional ad4ustments are re"uired to any of the $alances% Posting is the process of transferring figures from the 4ournal to the ledger accounts Property Plant and Equipment are assets used in the &roduction of *oods and ser,ices Purchase invoice is a $ill from a vendor for specific materials or supplies furnished or services rendered% It is called sales invoice from the point of view of the seller% Purchases ournal. This is a paya$le system involves a Purchases Journal 66 in which all incoming merchandise invoices are recorded% !atio Analysis is the comparison of actual or pro4ected data for a particular company to other data for that company or industry in order to analyze trends or relationships !eceivables are amounts of money due from customers or other 0 1T,/S !ent e&pense is the e7penditure made to cover the rental for the premises% !ent income is money received $y a person or organization from rental of premises andAor other assets%

!etained %arnings are profits of the $usiness that have not $een paid out to the owners as of the $alance sheet date% !evenue represents the inflow of assets &or decrease in lia$ilities) due operating activities% This may include sales of products, merchandise, and services5 and earnings from INT / ST, 0I;I0 N0, rents% !outine journal entries /ecurring financial activities reflected in the accounting records in the normal course of $usiness% Salaries/$ages e&pense is an account title used to record salaries, wages, and $enefits an employee receives from an employer% Sales ournal This is a receiva$les system involves a Sales Journal 66 in which all invoices outgoing to customers are recorded% Sales invoice is a document issued $y a vendor for specific materials or supplies furnished or services rendered% It is called purchase invoice from the point of view of the seller% Sole Proprietorship is a form of entity with one owner and the simplest possi$le form of $usiness% Statement o" Cash 'lo$ reports sources and uses of cash% This is one of the $asic financial statements that are re"uired as part of a complete set of financial statements prepared in conformity with generally accepted accounting principles% It categorizes net cash provided or used during a period as operating, investing and financing activities, and reconciles $eginning and ending cash and cash e"uivalents Statement o" Changes in %quity e7plains the changes in contri$uted capital and retained earnings during the period% Subsidiary +edger is a group of su$sidiary accounts the sum of the $alances of which is e"ual to the $alance of the related control account in the general ledger Transactions and events are recorded as they occur, recorded even if cash is not received or paid and affect the accounting e"uation% Trial balance confirms that accounts are still in balance. /tilities e&pense is an account title used to record amount incurred on heat, light, water, and power% 0ouchers are a written record of e7penditure, dis$ursement, or completed transaction% 1orksheet is a document or schedule in which a bookkee&er uses to *ather information to substantiate an account balance.