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Midterms > ACTG121 Chapter 7 - 10 > Flashcards

ACTG121 Chapter 7 - 10 Flashcards

1
Q

Is done by transferring the amounts of debit and credits in a recorded journal entry to the ledger accounts. The purpose of it is to classify the effects of transactions on specific A/L/E/I/E in order to provide more meaningful information.

A

Posting

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2
Q

Preparation of the trial balance creates a starting point for the preparation of the FS, it is also prepared to check the equality of total debits and total credits in the ledger

A

Types of Trial Balance

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3
Q

Prepared before adjusting entries are made, must be equal to proceed to next step

A

Unadjusted Trial Balance

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4
Q

Prepared after adjusting entries but before the FS are prepared.

A

Adjusted Trial Balance

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5
Q

Prepared after the closing process

A

Post-Closing Trial Balance

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6
Q
  • Journalizing or Posting one-half of an entry, w/o a debit or credit vice versa
  • Recording one part of an entry for a different amount than the other part
  • Trans placement error on one side of an entry
  • Trans position error on one side of an entry
A

Errors revealed by a trial balance

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7
Q
  • Omitting entirely the entry for a transaction
  • Journalizing or posting an entry twice
  • Using a wrong account with the same normal Bal. as the correct account
  • Wrong computation with same erroneous amount posted to both the debit and credit sides
A

Errors NOT revealed by a trial balance

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8
Q

Are made prior to the preparation of FS to update certain account so that they reflect correct balances as of the designated time

A

Adjusting Entries

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9
Q
  • To take up unrecorded income and expense of the period
  • To split mixed accounts into their real and nominal accounts
A

Purpose of Adjusting Entries

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10
Q
  • Cost that provides economic benefits over several accounting periods but cannot be directly associated with the earning of revenues are recognized as expenses over the periods where the economic benefits are consumed
  • Concept of Recog of Depreciation Expense applies to this, Expenditure to acquire equipment is initially recorded as asset. However, because of this expenditure cannot be directly associated with sales, the expenditure is recognized as expense over the periods the equipment is used
A

The Concept of Systematic and rational allocation

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11
Q
  • Cost that produces no future economic benefits or an asset that ceases to provide future economic benefits is recognized immediately as an expense
  • Application of this concept is the recognition of debts expense, Ex. AR is immediately charged as bad debt expense because it ceased to provide future economic benefits
A

The Concept of Immediate Recognition

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12
Q

Accounts that are not closed at the end of the accounting period. These are extended to the next accounting period. It includes BLS Accounts, except “Owners Drawings”, Unexpired portion

A

Real Accounts (Permanent Accounts)

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13
Q

Accounts that are closed at the end of the accounting period. These are extended to the next accounting period. It includes IS Accounts, Drawings account, clearing accounts and suspense accounts, Expired portion

A

Nominal Accounts (Temporary Accounts)

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14
Q

An account used temporarily to store amounts that will eventually be transferred to another account. Ex. The Bal of “Inc Summary” is closed to the “owner’s capital” before FS are prepared.

A

Clearing Account

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15
Q

An account used temporarily to store discrepancies in the accounts pending their analysis and permanent classification. Ex The ”Cash shortage or overage” is closed to a receivable or loss (for shortages) or payable or gain (for overages)

A

Suspended Account

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16
Q

Accounts that have both real & nominal account components. THESE ACCOUNTS ARE SUBJECT TO ADJUSTMENT, It includes unadjusted prepayments “Prepaid Assets” and deferrals “Unearned Income” that have both expired and unexpired components

A

Mixed Accounts

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17
Q

Adv. Collections of income are Initially credited to a liability account. The earned portion at the end of the period is recog as Income

A

Liability method

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18
Q

Adv. Collections of income are Initially credited to an income account, The unearned portion at the end of the period is recog as liability

A

Income method

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19
Q

First 9 mos. of the 1 yr. rent in advance covering the months of Apr 1 to Dec 31, 20x1
ex. (10,000 rent per mos. x 9 mos. = 90,000)

A

Earned portion (used up)

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20
Q

The remaining 3 mos. covering Jan 1 to March 31, 20x2
ex. (10,000 rent per mos. x 3 mos. = 30,000)

A

Unearned portion (unused)

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21
Q

Prepayments of expenses are Initially debited to an asset account. The incurred portion at the end of the period is recog as expense, while incurred portion remains as asset

A

Asset Method

22
Q

Prepayments of expenses are Initially debited to an expense account, The unused portion at the end of the period is recog. as asset, while incurred portion remains as expense

A

Expense Method

23
Q

First 3 mos. of 1 yr. prepaid insurance covering the mos. of Oct 1 to Dec 31, 20x1
ex. (120,000 x 3mos./12mos = 30,000)

A

Incurred portion (used up or expired)

24
Q

The remaining 9 mos. of Jan 1 to Sept 30, 20x2
ex. (120,000 x 9mos/12mos = 90,000)

A

Not yet incurred portion (unused or unexpired

25
Q
  • To recognize Income that is already earned but not yet collected
  • To recognize expense that is already incurred but not yet paid
A

Accrual

26
Q
  • To postpone the Income recognition of an advance collection. It is treated as liability until earned
  • To postpone the Expense recognition of a prepayment. It is treated as asset until incurred
A

Deferral

27
Q

Is an analytical device used to facilitate the gathering of data for adjustments.

A

Worksheet

28
Q

Are end product of the accounting process.

A

Financial Statements

29
Q

shows information on Asset/Liability/Equity

A

Statement of Financial Position

30
Q

shows information on Income/Expense and Profit/Loss

A

Statement of Comprehensive Income

31
Q

To zero out all nominal accounts, so that it will not commingle with the transactions in the next period

A

Closing Entries

32
Q

All Inc accs. are ________ and all Exp accs. are ________. The resulting bal. is recorded in a clearing account called the _______ _______

A

debited, credit
Income Summary

33
Q

The balance of Income Summary is closed to the ______ _______ account

A

Owner’s Capital

34
Q

Any balance in the _________ _________ account is closed to the _______ __________ account

A

Owner’s drawings
Owner’s capital

35
Q

DB & CD in Closing Entries are placed here

A

Closing entries

36
Q

The amounts in the “Adjusted Trial Balance” are cross footed with the amounts in the “Closing entries” columns. The resulting amounts are then placed in the “post-closing trial balance”

A

Post-closing Trial Balance

37
Q

Are entries usually made on the first day of the next accounting period to reverse certain adjusting entries in the immediately preceding period.

A

Reversing Entries

38
Q
  1. Accruals for income or expense
  2. Prepayments initially recorded using the Expense method
  3. Advanced collections initially recorded using the Income method
A

Adjusting Entries that may be reversed

39
Q

is one that buys and sells goods without changing their physical form

A

Merchandising Business

40
Q

refers to the goods that a merchandising business has purchased and primarily intended for resale, normally in their original form and without any further processing.

A

Inventory

41
Q

Inventories are accounted for using

A

Perpetual Inventory System
Periodic Individual System

42
Q

In laymans terms, the word ‘‘perpetual’’ means continuing forever.

A

Perpetual Inventory System

43
Q

In laymans terms, the word ‘‘periodic’’ means occuring or recurring at regular intervals

A

Periodic Inventory System

44
Q

the account used to record purchases of inventory under the periodic system

A

Purchases

45
Q

the account used to record the shipping costs incurred in purchases of inventory under the periodic system.

A

Freight-in

46
Q

the account used to record of purchased goods to the supplier

A

Purchase returns

47
Q

the account used to record cash discounts availed of on the purchased goods

A

Purchase discounts

48
Q

include both cash sales and credit sales

A

Sales

49
Q

the account used to record cash discounts given to customers

A

Sales returns

50
Q

the account used to record cash discounts given to customers

A

Sales discounts

51
Q

is not a formal accounting report that is prepared for external reporting

A

Statement of COGS and GROSS Profit

Midterms (17 decks)

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