Glossary of Terms
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- Carrying value:
- The unexpired portion of the cost of an asset. Also called book value.
- Cash:
- Coins and currency on hand, check and money orders from customers, and deposits in bank checking accounts.
- Cash basis of accounting:
- Accounting for revenues and expenses on a cash received and cash paid basis.
- Cash equivalents:
- Short-term investments that will revert to cash in less than ninety days.
- Cash payments journal:
- A multicolumn special-purpose journal used to record payments of cash. Also called cash disbursements journal.
- Cash Receipts journal:
- A multicolumn special-purpose journal used to record transactions involving the receipt of cash.
- Cash Short or Over:
- The account debited for cash shortages and credited for overages; to call management’s attention to irregular activity.
- Certified internal auditor (CIA):
- The professional certification for auditors who carry out their work within a company.
- Certified management accountant (CMA):
- The status awarded to qualified accountants by the Institute of Certified Management Accountants.
- Certified public accountant (CPA):
- A public accountant who has met the stringent licensing requirements set by the individual states.
- Chart of accounts:
- A scheme that assigns a unique number to each account to facilitate finding the account in the ledger; also, the list of account numbers and titles.
- Check:
- A written order to a bank to pay the amount specified from funds on deposit.
- Check authorization:
- A form prepared by the accounting department after it has compared the receiving report for goods received with the purchase order and the invoice.
- Check register:
- In a voucher system, the journal in which voucher checks are listed as they are written.
- Classification:
- The process of assigning transactions to the appropriate accounts.
- Classified financial statements:
- General-purpose external financial statements that are divided into subcategories.
- Closing entries:
- Journal entries at the end of an accounting period that set the stage for the next accounting period by clearing the temporary accounts of their balances, and that summarize a period’s revenues and expenses.
- Comparability:
- The convention of presenting information is such a way that decision makers can recognize similarities, differences, and trends in different time periods or companies.
- Compatibility principle:
- The principle that holds that the design of an accounting system be in harmony with the organizational and human factors of a business.
- Compensating balance:
- A minimum amount that a bank requires to kept in an account as part of a credit-granting arrangement.
- Compound entry:
- A journal entry that has more than one debit or credit entry.
- Computer:
- An electronic tool for the rapid collection, organization, and communication of large amounts of information.
- Computer operator:
- The person who runs a computer.
- Condensed financial statements:
- Financial statements for external reporting purposes that present only the major categories of information.
- Conservatism:
- The convention that mandates that, when faced with two equally acceptable alternatives, the accountant must choose the one less likely to overstate assets and income.
- Consignment:
- The placing of goods by the owner of the goods (the consignor) on the premises of another company (the consignee).
- Consistency:
- The convention that an accounting procedure, once adopted is not changed from one period to another unless users are informed of the change.
- Contingent liability:
- A potential liability that can develop into a real liability if a possible subsequent event occurs.
- Continuity issue:
- The difficulty associated with not knowing how long a business entity will survive.
- Contra account:
- An account whose balance is subtracted from an associated account in the financial statement.
- Contributed capital:
- The accounts that reflect the stockholders’ investment in a corporation, Also called Paid-in Capital.
- Contribution margin:
- The excess of revenues over all variable costs related to a particular sales volume.
- Control:
- The process of seeing that plans are carried out.
- Control environment:
- The overall attitude, awareness, and actions of the owners and management of a business, as reflected in philosophy and operating style, organizational structure, methods of assigning authority and responsibility, and personnel policies and practices.
- Control principle:
- The principle that holds that an accounting system must provide all the features of internal control needed to protect the firm's assets and to be sure the data are reliable.
- Control procedures:
- Procedures and policies established by management to ensure that the objectives of internal control are being met.
- Controlling account:
- An account in the general ledger that summarizes the total balance of a group of related accounts in a subsidiary ledger. Also called control account.
- Corporation:
- A business unit that is legally separate from its owners.
- Cost:
- The exchange price associated with business transaction at the point of recognition. Cost is the net purchase price plus all reasonable and necessary expenditures to get the asset in place and ready for use.
- Cost behavior:
- The way costs respond to changes in volume or activity.
- Cost-benefit principle:
- The principle that holds that the benefits derived from an accounting system and the information it generates should equal or exceed its cost.
- Cost flow:
- Association of costs with their assumed flow within the operations of the company.
- Cost of goods manufactured:
- The total manufacturing costs attached to units of a product completed during an accounting period.
- Cost of goods sold:
- The amount paid for the goods sold during an accounting period.
- Cost principle:
- The practice of recording transaction at cost and maintaining this cost in the records until an asset, liability, or component of owner’s equity is sold, expires, is consumed, is satisfied, or otherwise is disposed of.
- Cost-volume-profit (C-V-P) analysis:
- An analysis of the cost behavior patterns that underlie the relationships among cost, volume of output, and profit.
- Credit:
- The right side of an account.
- Crossfooting:
- Adding and subtracting numbers across a row.
- Current assets:
- Cash or other assets that are reasonable expected to be realized in cash, sold, or consumed within one year or within a normal operating cycle, whichever is longer.
- Current liabilities:
- Obligations due within one year or within the normal operating cycle, whichever is longer.
- Current ratio:
- A measure of liquidity; current assets divided by current liabilities.