Accounting Book #7

Question 1

Adjusting Entries

Answer 1

entries made in the journal to adjust the ledger accounts so that they will contain the same balances as shown on the worksheet.

Question 2

Adjustment

Answer 2

an amount that is added to or subtracted from an account balance to bring the balance up to date.

Question 3

Asset/Expense Adjustment

Answer 3

a type of deferral adjustment that distributes the expense of consumed assets (such as supplies) over more than one fiscal period.

Question 4

Balance Sheet

Answer 4

A financial statement that reports assets, liabilities, and owner’s equity on a specific date.

Question 5

Closing Entries

Answer 5

Journal entries prepared at the end of a fiscal period to transfer the balance of revenue and expense accounts to the proprietor’s Capital account.

Question 6

Deferral Adjustments

Answer 6

Adjustments to accounts that delay the recognition of the expenses or revenue until a fiscal period later than the one during which the cash was paid or the liability incurred.

Question 7

Fiscal Period

Answer 7

the length of the accounting cycle for which a business summarizes and reports financial information.

Question 8

Income Statement

Answer 8

a financial statement that reports the revenue and expenses for a fiscal period.

Question 9

Income Summary Account

Answer 9

A temporary account whose balance is transferred to the permanent Capital account at the end of each accounting period.

Question 10

Matching Expenses with Revenue

Answer 10

all revenue and expenses associated with a business activity are to be recorded in the same accounting period.

Question 11

Net Income

Answer 11

the difference between total revenue and total expenses when total revenue is greater than total expense.

Question 12

Net Loss

Answer 12

the difference between total revenue and total expenses when total expenses are greater than total revenue.

Question 13

Post-Closing Trial Balance

Answer 13

a trial balance completed to check the equality of the debits and credits in the general ledger accounts that remain open after the closing process has been completed.

Question 14

Working Papers

Answer 14

informal papers in the form of memoranda, analysis papers, and informal reports.

Question 15

Worksheet

Answer 15

a columnar accounting form used to summarize the general ledger information needed to prepare financial statements.

Question 16

Temporary Accounts

Answer 16

accounts that accumulate financial information until it is transferred to the owner’s Capital account; also known as nominal accounts.

Question 17

Permanent Accounts

Answer 17

accounts that accumulate financial information from one fiscal period to another; also known as real accounts.

Question 18

Consistent Reporting

Answer 18

the same accounting concepts are applied the same way for each accounting period for as long as the business operates.

Question 19

Trial Balance

Answer 19

a proof of the equality of debits and credits in a general ledger.