The sales account is the ledger account, which gives the details regarding the sales of the business.
Sales and Collection Budget
Sales and collection budget is the amount of sales that the company expects to make in the year and the revenues that it expects to collect.
Sales and Marketing Expense
Sales and marketing expenses are the total expenses spent on creating awareness for the company and the products in the market and selling them.
The discount allowed by the company on sales to induce early cash payment is called sales discount.
Sales invoice is the record of the transaction between the buyer and the seller, made by the seller.
Sales Journal is where the entry for sales of goods is chronologically made.
Sales order is the contract in which the buyer and the seller of the goods agree on the terms of a contract.
Sales proceeds is the money realized from sales.
Sales return is the goods returned by the customer to the business due to poor quality, unsuitability, etc.
Sales revenue is the revenue realized from the sale of goods.
Sales tax is the tax levied on the sale of a product by the government.
Salvage value is the scrap value realized on the sale of a fully depreciated asset or a asset which cannot be used for production.
Refer Salvage Value
Selling and Administrative Expense Budget
Selling and administrative expenses budget gives the amount that is allocated for selling and administrative expenses of the business.
Semi-fixed costs are those costs where one component of the cost is fixed and the other is variable.
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Accounting is the process of keeping financial records, classifying, summarizing and analyzing all transactions of a business (Eisen, 2009). This provides vital information for making decisions concerning the operations of the business. Use of computerized accounting system is advised to minimize any incidents of errors. The accounting cycle provides eight series of steps used to achieve the purpose of accounting in any organization (Eisen, 2009).
Collection and Analyzing Data from Transactions
All the financial source documents for every transaction are collected and verified. These documents involve all money operations that were either spent or received. They provide evidence through the date, amount and a description on the nature of the transaction. Incase some of the source documents are misplaced, a document entailing the specific transaction should be created using such evidence like bank checks. This step provides for the integrity of the whole accounting system. It enhances accountability and reliability. All the source documents are filed for retrieval and can be recalled during an audit process (Eisen, 2009).
Journalizing All Transactions
Once all the transactions have been collected and analyzed, they are presented in a general journal. Before the entry, one must decide the specific accounts to be affected by the activity. Most owners of businesses journalize all transactions at the end of each day of operations. The total amounts of debit and credit in any case are written in this original entry. An accounting paper, which contains pre-determined columns and entry points for such information, can be used as the journal.
Posting Entries into the General Ledger
A general ledger is a document that contains particular accounting information and monitors individual financial credit balances (Eisen, 2009). According to the particular organization, accounts needed are created. The chronological entries from the journals are fed into the ledger. The ledger allows one to easily view the activities, balances of the various accounts, and provide relevant information for each account of the organization.
Preparation of a trial balance
A trial balance contains a list of account names and their respective balances on the particular date (Eisen, 2009). It is a check that all the previous calculations in the earlier steps are correct. This helps determine the errors present. It is a summary of all account balances. The total debits and credits should balance. If the two do not balance, adequate corrections should be done before proceeding.
Adjustment of Entries
This is an adjustment of all errors present from the previous trial balance. It is a means of rectification fro an un-adjusted trial balance into an adjusted trial balance. It involves verification of all entries in their particular fields.
Preparation of Financial Statements
Financial statements are reports containing information of a business or an organization. Financial statements are divided into four types, balance sheet, statement of cash flow, income statement and the owner’s equity statement (Eisen, 2009). The balance sheet reports assets, liabilities and respective shareholding equity of an organization. The statement of cash flow summarizes inflows and outflows of money. The income statement includes all revenues of a given time, minus the expenses. The owner’s equity statement contains income that the company holds after paying of dividends both at the end and beginning of the accounting duration. The four statements are inter-related. General Accepted Accounting Principles necessitate that these four financial statements should be duly reported.
Closure of the Books
This step is for making sure that the zero balance is achieved after the accounts are closed. They should balance.
Preparation of a Post-closing Trial Balance
This is the final step in the accounting cycle, which only details a summary of the previous steps in preparation of an entire new process again.
Eisen, P. J. (2009). Barron’s E-Z accounting. Hauppauge, NY: Barron’s Educational Series.
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An accounting cycle is the series of steps to be followed while preparing financial statements.
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Joint Ventures and Investments
Joint Ventures and Investments is the total investments and equity in a joint venture.
Journal is the first record of transactions of the business as they occur.
Journal entry is a record of the transactions made by the business.
Kaizen Budgeting is the budgeting approach, which takes into consideration projected future costs rather than current practices.
Kaizen costing is reducing the cost of production in small steps.
Lag time is the time between two closely related phenomena, such as stimulus and response.
Land is the asset account in which the details and the costs of land holding for the business are given.
Leasehold improvements are repairs and improvements made to leasehold land by the lessee.
Ledger is the book which consists of various individual accounts to which the journal entries are posted.
Ledger group is a group of ledgers that consist of a primary ledger and a number of secondary ledgers.
Legal Entity Assumption
Leverage is the property rising or falling at a greater proportion than the comparable investments.
Leverage ratios measure the impact of equity and debt capital on profitability.
Levied is a charge that is imposed or collected.
Liability is a loan or a debt for the business that needs to be discharged.
LIFO is the acronym for Last In First Out.
Thomas Johnson's book that explains the historical significance of managerial business practices and the impact that accounting managment has had only company development.
Gain may also be used to refer to a rise in value, rate or prices.
Garnish is to claim the debtor's wages/salary under a court order for previously defaulted debts.
Gearing ratio is the ratio that measures the percentage of the total capital employed financed by long term debt.
Generally Accepted Auditing Standards
Generally Accepted Auditing Standards are the standards, rules, and guidelines set by the Auditing Standards Board of the American Institute of Certified Public Accountants.
Gilt, in general use, is a bond issued by the government.
Global bond is a bond, which can be traded outside the country of its issue.
Global Fund is a type of mutual fund where the fund company can invest in companies located anywhere in the world
GMROI is the acronym for Gross Margin Return on Investment.
Going Concern Concept
Going Concern Concept of Accounting assumes that the business will remain in existence for all the foreseeable future.
Going public is used to indicate that a certain business is going to issue publicly traded share capital.
Going rate is the average cost of the products or services.
Golden Rules of Accounting
The Golden Rules of Accounting govern the treatment of various types of accounts in case of an economic event.
Capital budget is the forecast for large expenditures, and cash budget is the forecast for cash receipts and disbursements.
Financial engineering is the process that deals with creation and combination of a variety of financial instruments in order achieve a defined financial objective
Financial gearing is any borrowing which the business undertakes.
Financial interest is any relationship with a commercial entity.
Financial leverage is using debt to increase the return on equity
Financial management is a subject that deals with financial management and control, through analysis of financial statements.
Financing cost is the difference between the cost of purchasing the asset and the return that the asset provides.
Finished Goods Inventory
Finished goods inventory is the stock of finished goods lying unsold in the warehouse.
FIT is the acronym for Federal Income Tax.
Fixed assets are those assets that are required for normal conduct of business.
Fixed bond is a type of bond that pays interest at a fixed rate till maturity
Fixed Charge Ratio
Fixed costs are those costs, which do not vary depending on the level of production and sales.
Fixed deposits are amounts, which you keep with the bank for a specified period of time and earn a specific rate of interest, which is higher than the rate for savings accounts.
Fixed income is the type of income, which you get from an investment.
Duality concept is an accounting concept, which says that every accounting entry will have two effects, debit and credit.
Due diligence is the level of diligence that the internal audit committee is expected to maintain.
Duty is the tax which is imposed on imported goods.
E & OE
E & OE is an abbreviation for Errors and Omissions Excepted.
E & P
E & P is an abbreviation for Earnings and Profits.
Earned income is the income earned by selling goods and services.
Earning asset is simply an asset, which has a capacity to earn.
Earning Capacity is the net average earnings of an asset at any given point of time.
Earnings is the financial ability of the business to make distributions to its shareholders.
Earnings before Taxes
Earnings from Operations
Earnings per Share
EBIT is the acronym for Earnings Before Interest and Taxes.
EBITDA is the acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization.
EBITDARM is the acronym for Earnings Before Interest, Taxes, Depreciation, Amortization, Rent and Management fees.
Economic entity is the accounting concept that provides a context for economic events for recording the transactions.
Economic Order Quantity
Economic order quantity is that level of inventory to be ordered which minimizes the cost of holding and transporting inventory along with having the required stock all the time so that the production activity does not get hindered.
Economic value is the value of the asset derived from its earning capacity.
Economies of Scale
Economies of scale is a theory that the more quantity you buy, the lesser is the average cost of each individual item.
Effective Interest Rate
Effective interest rate is the cost of credit computed on a yearly basis and expressed as a percentage.
Effective Tax Rate
Effective tax rate is the net rate of all the taxes that a person/business pays on income.