"CLEP Financial Accounting," Vocabulary from Chapter 3

This list focuses on making money.

Here are links to all the chapters of the test prep book published by Research & Education Association: Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6, Chapter 7, Chapter 8, Chapter 9, Chapter 10, Chapter 11, Chapter 12, Chapter 13, Chapter 14, Chapter 15, Chapter 16, Chapter 17, Chapter 18, Chapter 19, Chapter 20
25 words 28 learners

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Full list of words from this list:

words only definitions & notes
  1. account
    a statement of recent transactions and the resulting balance
    key words to describe types of accounts:
    --liability account: payable or deferred
    --equity account: owner's name, withdrawal, dividend, stock
    --income account: sales, income or revenue
    --expense account: expense
    --asset account: receivable, prepaid, investment, inventory
    Many asset accounts list the name of the asset (such as "land" or "equipment"). Whenever CLEP questions list an account without one of these key words, assume it is an asset account.
  2. accumulate
    get or gather together
  3. depreciation
    a decrease in price or value
  4. chart
    a visual display of data or information
  5. income
    the amount of money one makes over a period of time
  6. inventory
    the merchandise that a shop has on hand
  7. percentage
    a proportion in relation to a whole
  8. analysis
    abstract separation of something into its various parts
  9. transportation
    the commercial enterprise of moving goods and materials
  10. withdraw
    remove (a commodity) from (a supply source)
  11. transaction
    conducting business within or between groups
  12. calculate
    make a mathematical computation
  13. total
    a quantity obtained by the addition of a group of numbers
  14. customer
    someone who pays for goods or services
  15. earn
    make money on some commercial or business transaction
  16. adjustment
    amount added or deducted based on qualifying circumstances
  17. supply
    an amount of something available for use
  18. refine
    improve or perfect by pruning or polishing
  19. contribution
    an amount of money given
  20. revenue
    the entire amount of income before any deductions are made
  21. gross
    before any deductions
  22. profit
    excess of revenues over outlays in a given period of time
  23. principle
    a rule or standard especially of good behavior
    Using business checks to pay for personal bills violates the Business Entity Principle, which requires no mixing of the owner's personal information with the business entity books.
  24. formula
    a statement expressing some fundamental principle
    --equity beginning + net income - withdrawal = equity ending
    --sales - cost of goods sold = gross profit
    --gross profit - expenses = net income
    --income - expenses = net income
    --purchase price - accumulated depreciation = book value of a long-lived asset
  25. clue
    evidence that helps to solve a problem
    --When you see the word "net," know that a subtraction has taken place: A - B = Net A.
    --The CLEP test will throw in personal spending information and ask you to calculate net income. Do not consider personal withdrawals as business expenses.
Created on November 2, 2016 (updated December 13, 2016)

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