"CLEP Financial Accounting," Vocabulary from Chapter 17

This list focuses on current liabilities.

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 13 learners

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Full list of words from this list:

  1. accrue
    grow by addition
  2. adjust
    make correspondent or conformable
  3. amortization
    reducing the value of an asset over a period of years
  4. schedule
    a list of times at which things are planned to occur
  5. routine
    an unvarying or habitual method or procedure
  6. principal
    the original amount of debt on which interest is calculated
  7. fraction
    a small part or item forming a piece of a whole
  8. wage
    payment for work
  9. salary
    fixed payment for services
  10. portion
    an amount created by dividing something
  11. previous
    just preceding something else in time or order
  12. prior
    earlier in time
  13. estimable
    able to be computed or approximated
  14. invoice
    an itemized statement of money owed for goods or services
  15. contractor
    someone who is hired to build things
  16. employee
    a worker who is hired to perform a job
  17. administrator
    someone who manages a business
  18. trigger
    put in motion or move to act
  19. event
    something that happens at a given place and time
  20. warranty
    written assurance that a product or service will be provided
  21. annual
    occurring every year
  22. reverse
    switch the position, order, or relation of
    For the CLEP test, keep in mind that reversing entries
    1. happen immediately after the closing entries of the previous year.
    2. are always made on the first day of the new period.
    3. are the reverse of the adjusting entries--that is, they switch the debits and credits.
    4. never require bookkeepers to change their routine to watch out for prior adjusting entries.
  23. principle
    a rule or standard especially of good behavior
    The Current Portion Principle requires a reporting of the current and non-current portions of all debt. Where the current portion cannot easily be estimated, this principle requires reporting the entire debt as current.
  24. formula
    a statement expressing some fundamental principle
    3 steps to calculate each row of the loan amortization schedule:
    1) principal x rate% x time in years = interest
    2) payment - interest = principal
    3) previous balance - principal paid = new balance
  25. clue
    evidence that helps to solve a problem
    Beware when the CLEP exam tests your knowledge of accrual expenses by suggesting that you debit an expense account when you pay the bills. Once an expense has been accrued, make sure not to count it again when the business pays. The time to accrue an expense is when the business legally owes the money and the amount owed is reasonably estimable. This contrasts with cash basis accounting which recognizes the expense when you pay the cash.
Created on November 2, 2016 (updated December 15, 2016)

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