Master the language of business across 20 foundational accounting, bookkeeping, and GAAP principles. Match each practical definition to the correct technical term!
Glossary Score:
A high-yield cheat sheet of the 20 foundational terms in this challenge:
| Term | Type | Summary Definition |
|---|---|---|
| General Ledger | Bookkeeping | Master collection of all individual accounts tracking historical balances. |
| General Journal | Bookkeeping | Book of original entry recording transactions chronologically. |
| Trial Balance | Internal Report | List of ending debit/credit balances proving total mathematical equality. |
| Chart of Accounts | Directory | Numbered index listing every available account in the entity's ledger. |
| Matching Principle | GAAP Standard | Expenses must be matched to the revenues they helped generate. |
| Posting | Procedure | Transferring recorded journal entries into general ledger accounts. |
| 2/10, n/30 | Credit Terms | 2% cash discount if paid within 10 days; full balance due in 30 days. |
| FOB Shipping Point | Freight | Buyer takes legal title at seller's dock and pays freight charges. |
| Temporary Accounts | Account Type | Nominal accounts (Revenues, Expenses, Dividends) closed to zero at year-end. |
| Permanent Accounts | Account Type | Real balance sheet accounts whose balances carry forward indefinitely. |
| Contra Account | Account Type | An account that directly reduces its companion account (e.g., Accum. Depreciation). |
| Accrual Accounting | Accounting Method | Recognizes revenue when earned and expenses when incurred, regardless of cash timing. |
| Unearned Revenue | Liability | Cash received before goods or services are delivered to the customer. |
| Prepaid Expense | Asset | Cash paid upfront for a future economic benefit (e.g., Prepaid Rent). |
| Depreciation | Cost Allocation | Systematically expensing the cost of a tangible capital asset over its useful life. |
| Materiality | GAAP Constraint | Permits minor non-GAAP treatment if an amount is too small to influence users. |
| Conservatism | Accounting Practice | When in doubt, choose the solution least likely to overstate assets or income. |
| Bank Reconciliation | Cash Control | Comparing the bank statement balance to company book balance to resolve timing gaps. |
| Gross Margin | Profit Metric | Net Sales revenue minus the direct Cost of Goods Sold (COGS). |
| FIFO | Inventory Costing | Assumes the earliest inventory purchased is the first inventory sold. |