1 Canadian tax & accounting term starting with J
Plain-language definitions, each with the CRA rule it comes from and the filings it affects.
Related terms from other letters
Terms the entry above rely on, defined the same way.
Double-Entry Bookkeeping
Double-entry bookkeeping records every transaction in at least two accounts, a debit and an equal credit, so the books always stay in balance.
In practice: You take out a $10,000 loan. Cash (an asset) increases by $10,000 as a debit, and the loan payable (a liability) increases by $10,000 as a credit. Two entries, equal and opposite, and the balance sheet still balances.
General Ledger
The general ledger is the master record containing every financial transaction of a business, organised by account, from which the financial statements are produced.
In practice: Every sale, expense and payment for the month posts to the general ledger. At month-end the bookkeeper reconciles the GL cash account to the bank statement to confirm nothing is missing or duplicated.
Trial Balance
A trial balance is a report listing the ending balance of every account in the general ledger, used to check that total debits equal total credits before preparing statements.
In practice: Before year-end statements are prepared, the accountant runs a trial balance. Total debits of $250,000 equal total credits of $250,000, confirming the ledger is internally balanced and ready to roll into the financial statements.
Bookkeeping
Bookkeeping is the day-to-day recording and categorising of a business's financial transactions, forming the foundation for accounting and tax filing.
In practice: Each month a bookkeeper reconciles the business bank account, categorises expenses, matches receipts to transactions, and prepares the numbers the accountant uses to file the HST return and, at year-end, the T2.
Accounts Payable
Accounts payable is the money your business owes to suppliers and vendors for goods or services received but not yet paid for.
In practice: You receive $3,000 of inventory plus $390 HST on net-30 terms. Your accounts payable increases by $3,390. When you file your HST return, the $390 is claimed as an input tax credit even before you have paid the supplier, provided you have the invoice.
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