Accounting Vocabulary
2026 | Key Terms,
Definitions, Practice
Questions, Answers,
Rationales & Exam Review
| Complete Ethics Study
Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
,account a device for recording the changes (increases or decreases) in the fundemental
accounting elements
account balance the difference between the total debits and the total credits in an account
accountant one who is concerned with the design of the system of records, the preparation of
reports based upon the recorded data, and the interpretation of the reports
accounting a language of business employed to communicate financial information based upon
analyzing, recording, classification, summarization, reporting, and interpretation of
financial data
accounting cycle the process involved in journalizing, posting to the ledger, taking a trail balance,
preparing statements, making adjusting and closing entries, and preparing a post-
closing trail balance, which is repeated each fiscal period
accounting equation A = L + OE
assets=liabilities+owener's equity
account payable an unwritten promise to pay creditors for property such as merchandise, supplies or
equipment purchased on credit, or for services received on credit
account receivable an unwritten promise by a customer to pay at a later date for goods sold or services
rendered
accounts receivable turnover measures how many times per year receivables are collected.
-net credit sales divided by Average Accounts receivable
-average receivable (Beginning Accounts Receivable minus (-) ending accounts
receivable) divided by 2
accrual accounting recording in each fiscal period applicable expenses, whether paid or not, and
income earned
accrued expense an expense incurred in operating a business during an accounting period but not
yet paid
accrued income income actually earned during an accounting period but which will not be received
until a future period
, acid test ratio/quick ratio quick assets divided by current liabilites
activity analysis measures how efficiently a firm is utilizing its assets
adjusted trail balance a trail balance taken after adjusting entries have been recorded
adjusting entries entries made at the conclusion of a fiscal period to bring accounts up to date
age of accounts receivable measures the average time required to collect receivables
-365 divided by accounts receivable turnover
age of inventory measures the average time required to sell inventory
- 365 divided by Inventory turnover
allowance for doubtful accounts (allowance for bad debts) a contra account utilized to accumulate totals against accounts recievable
analyzing determining the fundamental significance of business transactions so that financial
information may be properly processed
assets property of monetary value owned by a business
bad debts expense/uncollectible accounts expense/loss accounts receivable that are uncollectible
form uncollectible accounts
balance sheet (Statement of Financial Position; Statement a formal financial statement illustrating the assets, liabilities, and owner's equity of a
of Financial Condition) business as of a specific date
balance sheet common-size statements/percentage express the major items in the balance sheet as a percent of the total assets and
method compare with previous fiscal periods
2026 | Key Terms,
Definitions, Practice
Questions, Answers,
Rationales & Exam Review
| Complete Ethics Study
Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
,account a device for recording the changes (increases or decreases) in the fundemental
accounting elements
account balance the difference between the total debits and the total credits in an account
accountant one who is concerned with the design of the system of records, the preparation of
reports based upon the recorded data, and the interpretation of the reports
accounting a language of business employed to communicate financial information based upon
analyzing, recording, classification, summarization, reporting, and interpretation of
financial data
accounting cycle the process involved in journalizing, posting to the ledger, taking a trail balance,
preparing statements, making adjusting and closing entries, and preparing a post-
closing trail balance, which is repeated each fiscal period
accounting equation A = L + OE
assets=liabilities+owener's equity
account payable an unwritten promise to pay creditors for property such as merchandise, supplies or
equipment purchased on credit, or for services received on credit
account receivable an unwritten promise by a customer to pay at a later date for goods sold or services
rendered
accounts receivable turnover measures how many times per year receivables are collected.
-net credit sales divided by Average Accounts receivable
-average receivable (Beginning Accounts Receivable minus (-) ending accounts
receivable) divided by 2
accrual accounting recording in each fiscal period applicable expenses, whether paid or not, and
income earned
accrued expense an expense incurred in operating a business during an accounting period but not
yet paid
accrued income income actually earned during an accounting period but which will not be received
until a future period
, acid test ratio/quick ratio quick assets divided by current liabilites
activity analysis measures how efficiently a firm is utilizing its assets
adjusted trail balance a trail balance taken after adjusting entries have been recorded
adjusting entries entries made at the conclusion of a fiscal period to bring accounts up to date
age of accounts receivable measures the average time required to collect receivables
-365 divided by accounts receivable turnover
age of inventory measures the average time required to sell inventory
- 365 divided by Inventory turnover
allowance for doubtful accounts (allowance for bad debts) a contra account utilized to accumulate totals against accounts recievable
analyzing determining the fundamental significance of business transactions so that financial
information may be properly processed
assets property of monetary value owned by a business
bad debts expense/uncollectible accounts expense/loss accounts receivable that are uncollectible
form uncollectible accounts
balance sheet (Statement of Financial Position; Statement a formal financial statement illustrating the assets, liabilities, and owner's equity of a
of Financial Condition) business as of a specific date
balance sheet common-size statements/percentage express the major items in the balance sheet as a percent of the total assets and
method compare with previous fiscal periods
