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FAR/AP > 04 Accounting Process > Flashcards

04 Accounting Process Flashcards

1
Q

Steps or procedures used in recording transactions and preparing financial statements.

A

Accounting Cycle

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2
Q

What are the steps in the accounting cycle?

A
  1. Analyze business documents or transactions
  2. Journalizing
  3. Posting
  4. Unadjusted trial balance
  5. Adjusting entries
  6. Prepare FS
  7. Prepare closing entries
  8. Prepare post-closing trial balance
  9. Prepare reversing entries
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3
Q

Which steps in the accounting cycle are optional?

A

unadjusted and post-closing trial balance, reversing entries and worksheet

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4
Q

Pertain to original source materials evidencing a transaction.

A

Business or source documents (sales and purchase invoices, official receipts, debit and credit memos)

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4
Q

Pertain to ledgers.

A

Books offinal entry

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5
Q

Pertain to journals.

A

Books of original entry

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6
Q

Process of recording transactions in the journal

A

Journalizing

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7
Q

Each transaction is recorded in two parts (debit and credit)

A

Double Entry System

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8
Q

Concepts followed by double entry system

A

Duality and Equilibrium

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9
Q

Transactions are recorded through simple narrative

A

Single Entry System

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10
Q

Types of ledger

A

General - all accounts in trial balance
Subsidiary - details of certain general ledger accounts (control accounts)

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11
Q

Types of journals

A
  1. General - transactions not recorded in special journal
  2. Special - promote efficiency to record similar transactions
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12
Q

What is included in:
Sales journal
Cash receipts journal
Purchases journal
Cash disbursement journal

A

sales - credit sales only
cash receipts - all cash receipts
purchases - credit purchases only
cash disbursement - all cash payments

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13
Q

Transferring data from journal to appropriate accounts in the ledger

A

Posting

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14
Q

Systematic listing of GL accounts

A

Chart of accounts

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14
Q

Basic storage of information in accounting

A

Account

15
Q

Permanent accounts that are carried from one accounting period to another

A

Real accounts

16
Q

Temporary accounts closed at the end of the accounting period

A

Nominal accounts

17
Q

Accounts that represent those with real and nominal elements

A

Mixed Accounts

18
Q

Differentiate the two types of valuation accounts

A

Contra Accounts - deducted from related accounts
Adjunct Accounts - added to a related account

19
Q

List of GL accounts with their respective debit or credit balance

A

Trial Balance

20
Q

Errors not revealed by a trial balance

A

> omission of an entry
double posting
classification error

21
Q

Three types of trial balance

A

Unadjusted, adjusted, post-closing

22
Q

All adjusting entries involve _________________.

A

One balance sheet account and one income statement account

23
Q

Entries made at the end of every accounting period to split mixed accounts or bring accounts up to date.

A

Adjusting entries

24
Q

Methods of recording prepaid expense

A

Expense method - original payment is debited to an expense account
Asset method - original payment is debited to an asset account

25
Q

Methods of recording unearned income

A

Income method - income account is credited for receipt of income
Liability method - liability is credited for receipt of income

26
Q

Multi-column sheet of paper used in compiling and summarizing information necessary for preparation of FS

A

Worksheet

26
Q

Format of worksheet

A

Unadjusted TB
Adjusting entries
Adjusted TB
Income statement
Balance Sheet

27
Q

Entries made at the end of the accounting period after adjusting entries and preparation of FS to close all nominal accounts.

A

Closing Entries

28
Q

What concept is applied in closing the books?

A

Periodicity Concept

29
Q

Entries made at the beginning of the new accounting period to transfer all accrued and prepaid items established by adjusting entries to the nominal accounts

A

Reversing Entries

FAR/AP (7 decks)

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