by PushtoLearn
Bookkeeping
Table of Contents
Bookkeeping Exercises
These exercises focus on Bookkeeping
Vocabulary List for Unit Bookkeeping
1. Transaction (noun)
Definition: An exchange or transfer of goods, services, or funds between two parties.
Example: The purchase of new office furniture is recorded as a business transaction.
Explanation: Understanding transactions is critical because they form the basis of all bookkeeping records.
2. Bookkeeper (noun)
Definition: A person responsible for recording the financial transactions of a business.
Example: The bookkeeper ensured all invoices were accurately entered into the system.
Explanation: Bookkeepers play a vital role in maintaining accurate financial records.
3. Account (noun)
Definition: A record in bookkeeping that tracks financial transactions for specific categories, such as expenses or revenue.
Example: The marketing department's expenses were allocated to the advertising account.
Explanation: Accounts help organize financial information into manageable and meaningful categories.
4. Debit (noun/verb)
Definition: An entry that increases assets or expenses and decreases liabilities or equity.
Example: The rent payment was debited from the cash account.
Explanation: Understanding debits helps track where funds are being allocated in the financial system.
5. Credit (noun/verb)
Definition: An entry that decreases assets or expenses and increases liabilities or equity.
Example: The loan repayment was credited to the bank account.
Explanation: Credits are essential for balancing financial accounts and ensuring accurate bookkeeping.
6. Raw Material (noun)
Definition: Basic materials used in the production of goods.
Example: The company ordered raw materials like steel and plastic for manufacturing.
Explanation: Tracking raw materials is crucial for inventory management and production costs.
7. Stock (noun)
Definition: Goods or materials that a business holds for sale or production.
Example: The warehouse manager reviewed the stock to ensure adequate supply levels.
Explanation: Monitoring stock helps businesses manage inventory effectively and avoid shortages or overages.
8. Debtor (noun)
Definition: A person or entity that owes money to the business.
Example: The debtor was given a 30-day period to settle the outstanding invoice.
Explanation: Keeping track of debtors is important for managing cash flow and accounts receivable.
9. Ledger (noun)
Definition: A book or digital record that contains the financial accounts of a business.
Example: All financial transactions were recorded in the general ledger.
Explanation: Ledgers provide a comprehensive overview of all the accounts in a business.
10. Creditor (noun)
Definition: A person or entity to whom money is owed by the business.
Example: The business repaid its creditors to maintain a good credit rating.
Explanation: Managing creditors helps businesses handle liabilities and maintain financial stability.
11. Accounting Period (noun)
Definition: A specific time frame for which financial statements are prepared.
Example: The accounting period for the company ends on December 31st.
Explanation: Understanding accounting periods is essential for preparing and analyzing financial reports.
12. Trial (noun)
Definition: A preliminary assessment of account balances to ensure they are accurate and balanced.
Example: The accountant performed a trial balance to check for errors.
Explanation: Trials help verify the accuracy of bookkeeping before finalizing financial statements.
Wordlist for Bookkeeping, Professional English in Use - Finance Vocabular
|
Word |
Definition |
Example |
|
transaction |
an exchange or transfer of goods, services, or money between parties |
An error occurred during the last transaction |
|
bookkeeper |
a person who records financial transactions, maintains financial records, and prepares financial reports for an organization |
A bookkeeper keeps financial records for a business |
|
account |
a record of financial transactions related to a specific entity, such as an individual or a business, often used for tracking expenses, income, and balances |
Alison drew money out of her account to pay for our trip |
|
debit |
an entry in a financial account that represents an amount owed or a decrease in an account balance |
The amount of the cheque has been debited to your account |
|
credit |
an entry in a financial account that represents an amount received or an increase in an account balance |
The bank wouldn't extend them any credit |
|
raw material |
unprocessed or basic materials used in the production of goods or services, typically obtained from natural resources |
Nissan forecasts an unexpected 7.7 percent fall in operating profit this year on higher raw material costs |
|
stock |
goods or merchandise that a business holds for sale or use in its operations, also referred to as inventory |
He had soon exhausted his stock of jokes |
|
debtor |
a person or entity that owes money or is in debt to another person or entity |
Debtor is someone who owes money to a creditor |
|
ledger |
a book or electronic record used to track financial transactions, often organized in accounts and used to prepare financial statements |
A ledger is the book of accounts of an office or shop |
|
creditor |
a person or entity to whom money is owed or who extends credit to another person or entity |
The company couldn't pay its creditors |
|
accounting period |
a specific time period, such as a month, quarter, or year, during which financial transactions are recorded and financial statements are prepared |
The deferred income tax has to be calculated at the end of accounting period |
|
trial |
a test or examination of financial records or accounts to verify their accuracy, often done as part of the auditing process |
At the end of the trial, he was sent to prison |
FAQ
What is the difference between a debit and a credit?
A debit increases assets or expenses and decreases liabilities or equity, while a credit decreases assets or expenses and increases liabilities or equity. Both are essential for balancing accounts.
Why are ledgers important in bookkeeping?
Ledgers consolidate all financial transactions into organized accounts, providing a clear overview of a business's financial status.
How do accounting periods help businesses?
Accounting periods structure financial activities into consistent time frames, making it easier to compare performance and prepare financial statements.
What’s the difference between a debtor and a creditor?
A debtor owes money to the business, while a creditor is someone the business owes money to.
Why is a trial balance necessary?
A trial balance ensures that the total debits equal the total credits, helping to identify errors in the bookkeeping process.
