Accounting Unit 4: Vocabulary

To pass this unit, please study the 15 vocabulary words below.
accrual basis accounting
the method of accounting in which income and expenditure are recorded at the date they are earned / incurred
From the accounting point of view, it doesn't matter when you actually receive the payment as I am using accrual basis accounting so I have already accounted for the invoice.
be consistent with
in agreement with, In accordance with
Whichever method you use when accounting for tax, it is important to be consistent with the regulations in that method.
depreciation
the method of allocating the cost of an asset over its useful life
The depreciation of the new machine will happen over 12 years.
expense
show the full cost of something in the company
I don't expect that the new van will be worth anything after 12 months, so I decided to expense it in the accounts this year.
fixed asset
an asset which is not consumed or sold during the normal course of business activities
The auditors checked through the list of fixed assets and made sure that all the machinery, vehicles and property listed really existed.
GAAP (generally accepted accounting principles)
the common set of standards and procedures used by companies when preparing financial statements
All accountants should have a firm understanding of GAAP, and follow the principles closely.
levy
impose or collect
The government levies a higher tax on luxury goods, than on basic products.
net earnings
a company's total revenue minus the operating expenses, depreciation, and interest paid and taxes
When the board reviewed the previous year's accounts they were pleased to see that the net earnings had increased.
omit
exclude, leave out
When the company was audited, it was noticed that $12,000 of income had been omitted from the tax return.
public company
a firm which is permitted to sell shares in the firm to the general public
After the merger Questcore became a public company and the value of their shares has increased by over 30%.
reducing balance depreciation
a method of deprecation which imposes a set rate of depreciation on the remaining balance of the asset
The new premises cost $100,000 but as we will be using reducing balance depreciation over 5 year - the first year will cost us the most.
revenue
the amount of money a company receives over a given time frame
Due to the Christmas season, revenues in shops are usually higher in the last quarter of the year than the first.
significant
having or expressing meaning, important
As a potential investor the most significant figures for me are the total profit and the liabilities.
tax accounting
methods of accounting which focus on tax instead of the appearance of public financial statements
Tax accounting provides a simpler method of calculating your tax liability.
taxable income
the amount of money on which tax is paid
Tax revenues fall when workers lose their jobs, and the taxable income that goes with them.
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