Accounting Unit 4: Vocabulary

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