ACCTG Flashcards
the adjustments to be recorded
in the general journal
ADJUSTING ENTRIES
an expense already paid but not yet incurred
Deferrals
expense already incurred but not yet paid
Accrual
(assets) expenses which customarily paid in advance / expire either with passage of time or through use and consumption
Prepaid Expense
tells that the business will never die
Going Concern
listing of all the balances of the different
accounts
Trial Balance
before adjustments
Preliminary Trial Balance
only the account with balance is listed (balance of debit and credit)
Trial Balance of Balances
accounts without balances, used for auditing purposes (total of debit and credit)
Trial balance of Totals
after adjustments
Adjusted Trial Balance
after the closing entries
Post-closing Trial Balance
serves as the means of communication
Financial Statements
it is the end which financial statements are prepared
Accounting Period
ends in December 31
Calendar Year
does not end in December 31
Fiscal Period
ends in the month business activities at their lowest
Natural Business Year
summarizes the different revenues shows the results of operations of the business
Income Statement
temporary accounts
Nominal Accounts
show the changes in the owner’s equity.
Statement of Changes in Owner’s Equity
show the assets, liabilities and owner’s
equity / shows the financial condition of the business
Balance Sheet
permanent account
Real Accounts
will show the sources and uses of cash
Cash Flow Statement
will affect net income
Operating Activities
will affect operating current assets
Investing Activities
will affect non-operating current liabilities
Financing Activities
only cash transactions are shown in the statement
Statement of Cash Flow
decrease of the value of a non-current asset
Depreciation
contra asset account
Accumulated Depreciation
neither paid for by clients
Accrued Revenues
allows clients to purchase goods
Uncollectible Accounts
accounting process / procedures involved are repeated
Accounting Cycle
gathering source documents
Documentation
recording the business transactions
Journalizing
transferring the entries
Posting
prepared the accuracy of posting
Preliminary Trial Balance (Unadjusted Trial Balance)
to facilitate the preparation
Worksheet (Working Paper)
prepared at the end of the accounting period
Financial Statements
entries prepared in the general journal at the end
Closing entries
income accounts have credit balances
Close the Income Account
expense accounts have debit balances
Close the Expense Account
the balance of the income summary account will be equal
Close the Income Summary Account
shows the amount by which capital is reduced
Close the Withdrawal Account
to carry forward in the next accounting period
Operating Entry
is a journal entry that is the exact opposite of a related adjusting entry.
Reversing Entries
Accounts to be reversed
- Accrued Income
* Accrued Expenses
* Prepaid Expenses
* Unearned Income
Two ways of presenting the statement of cash flows
- Direct Method
- Indirect Method
Usual adjustments made at the end of an accounting period
- Unused supplies
- Prepaid expense
- Accrued expense
- Unearned income
- Accrued income
Formula of interest
i=prt
