CH 8: Adjustments, Financial Statements, and the Closing Process Flashcards
During the accounting period
Analyze each transaction
Record entries in the journal
Post effects to the ledger
At the end of the accounting period
Prepare trial balance
Adjust revenues and expenses
Prepare and disseminate fnan statements
Close income statement accounts
unearned revenue
cash that was earned in the past
accrued revenue
amts that will be recieevd in the future (accs rec)
what does not depreciate
land
Net book value is reported on
balance sheet
net book value formula
the ending bal in property/equipment - the ending bal in the Accumulated Depreciation account.
Total assets turnover ratio
Net sales or operating revenue/ average total assets
-how efficient is mgmt in using its recouces to generate sales
net profit margin
net income/net sales (operating revenue)
-how effective is mgmt on generating porfit on every dollar of sales
current ratio
current assets/current liabilities
-does comp have the short term resources to pay back its short term debt
Temporary accounts
Inc State accounts
show gains or losses
permanent accounts
Assets
Liabilities
Stockholders equity
(balance sheet accts)
what happens during closing entries
o establish a 0 balance in each of temporary accounts to start the next period
company borrowed money from a bank and signed a one-year, 11 percent note for that amount. The principal and interest are payable on the maturity date.
D-expense
C-payable
money owed but not paid yet
D-expense
C-payable
