CS Financial & Accounting Basics Flashcards

What is a purchase order (PO)?

Answer: A document authorizing a vendor to supply goods at an agreed price

A purchase order is a formal document issued by a buyer to a seller authorizing a specific purchase.

Which term describes the process of recording financial transactions in the order they occur?

Answer: Journalizing

Journalizing is the first step in the accounting cycle — entering transactions chronologically into a journal.

A budget variance occurs when:

Answer: Actual spending differs from the budgeted amount

A budget variance is the difference, positive or negative, between the budgeted amount and the actual amount spent.

What is the purpose of an expense report?

Answer: To document employee business-related expenditures for reimbursement

An expense report allows employees to submit documentation of business expenses so they can be reimbursed by the company.

Which accounting principle states that revenue should be recorded when earned, not when cash is received?

Answer: Accrual accounting

Accrual accounting recognizes revenue when it is earned and expenses when they are incurred, regardless of cash flow timing.

What does 'net pay' mean on a paycheck?

Answer: Wages after all deductions have been subtracted

Net pay is the amount an employee actually receives after taxes, insurance, and other deductions are taken from gross pay.