Bookkeeping & the Ledger
The fundamentals of recording transactions: accounts, debits and credits, depreciation, and the ledger that holds it all.
31 terms
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01
Assets, Depreciation & Inventory
Accelerated Depreciation
An accounting method that allows for higher depreciation expenses in the early years of an asset's life compared to straight-line depreciation.
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02
Core Ledger Mechanics
Account
A systematic record of financial transactions that tracks specific assets, liabilities, equity, revenues, or expenses within an organization's accounting system.
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03
Assets, Depreciation & Inventory
Accumulated Depreciation
A contra-asset account that represents the total amount of depreciation expense charged against an asset since its acquisition.
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04
Core Ledger Mechanics
Balance
A fundamental accounting concept referring to the amount remaining in an account after recording all debits and credits, or more broadly, the equilibrium between different elements of financial statements.
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05
Assets, Depreciation & Inventory
Capitalized Cost
An expenditure that is added to the cost basis of a long-term asset rather than being expensed immediately.
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06
Assets, Depreciation & Inventory
Capitalized Interest
The cost of borrowing money to finance the construction or development of long-term assets, which is added to the asset's cost basis rather than being expensed immediately.
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07
Accounting Methods & Roles
Certified Management Accountant (CMA)
A professional designation focusing on financial planning, analysis, control, and decision support.
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08
Accounting Methods & Roles
Conservatism
An accounting principle that advocates recording uncertain items in the way that will result in least likely overstatement of assets and income.
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09
Accounting Methods & Roles
Consistency
A fundamental accounting principle requiring that once an entity adopts an accounting method or procedure, it should continue using that method for similar transactions and events unless there is a justified reason for change.
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10
Core Ledger Mechanics
Contra Account
A general ledger account that reduces the balance of a related account, allowing both the original and reducing amounts to be reported separately.
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11
Accounting Methods & Roles
Cost Accounting
A specialized branch of accounting focused on recording, analyzing, and controlling the costs of producing goods or services.
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12
Core Ledger Mechanics
Credit Balance
A negative balance in an account, often representing an amount owed or an adjustment to another account.
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13
Assets, Depreciation & Inventory
Current Asset
Assets expected to be converted into cash, sold, or consumed within one normal operating cycle or twelve months, whichever is longer.
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14
Liabilities & Expenses
Current Liability
An obligation a company expects to settle within one normal operating cycle or twelve months, whichever is longer, typically using current assets.
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15
Core Ledger Mechanics
Debit
An accounting entry that increases asset or expense accounts and decreases liability, equity, or revenue accounts.
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16
Core Ledger Mechanics
Debit Balance
The excess of debits over credits in an account, typically representing the normal balance for asset and expense accounts.
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17
Assets, Depreciation & Inventory
Depletion
A systematic allocation of the cost of natural resources over their expected production life as they are extracted or consumed.
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18
Assets, Depreciation & Inventory
Depreciation
The systematic allocation of an asset's cost over its estimated useful life, reflecting the consumption of the asset's economic benefits.
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19
Core Ledger Mechanics
Double-Entry Bookkeeping
A fundamental accounting system where each transaction is recorded with equal and offsetting entries in at least two accounts, maintaining the accounting equation's balance.
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20
Liabilities & Expenses
Expenditure
The spending or use of funds for business purposes, which can be classified as either capital expenditures (creating long-term benefits) or operating expenditures (supporting current operations).
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21
Assets, Depreciation & Inventory
Fixed Asset
Long-term tangible assets used in business operations, such as buildings, machinery, equipment, and vehicles, that are expected to provide benefits for more than one year.
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22
Accounting Methods & Roles
Fund Accounting
A specialized accounting system used primarily by nonprofit organizations and governments to track resources designated for specific purposes.
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23
Core Ledger Mechanics
General Ledger
The master accounting record containing all financial accounts and transactions of an organization.
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24
Assets, Depreciation & Inventory
Goodwill
An intangible asset representing the excess of purchase price over the fair value of identifiable net assets acquired in a business combination.
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25
Assets, Depreciation & Inventory
Inventory
Assets held for sale in the normal course of business, including raw materials, work in process, and finished goods.
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26
Liabilities & Expenses
Liability
An obligation to transfer economic benefits as a result of past transactions or events.
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27
Accounting Methods & Roles
Management Accounting
The practice of providing financial and operational information to internal decision-makers to support planning, control, and decision-making.
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28
Assets, Depreciation & Inventory
Perpetual Inventory
A continuous inventory tracking system that maintains real-time records of stock levels, purchases, and sales.
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29
Accounting Methods & Roles
Research and Development (R&D)
Activities undertaken to create new products, processes, or knowledge, or to improve existing ones.
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30
Liabilities & Expenses
Start-up Costs
Expenses incurred when beginning a new business or operation, including organization costs, initial marketing, and preliminary operations.
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31
Assets, Depreciation & Inventory
Tangible Asset
Physical assets with measurable value, such as buildings, equipment, inventory, and cash.