Chapter 3 - College Accounting: A Practical Approach Flashcards
What is something that takes place over an accounting period and includes the normal accounting procedures?
Accounting Cycle
What is an accounting period?
Period of time covered by the income statement
Is the accounting period one set period of time or can it differ?
It can differ with interim reports as well as on differently annual schedules
What is a calendar year?
January to December
What is a fiscal year?
Covers any 12 month period that the company chooses
What is a natural business year?
A fiscal year that ends at the same time that the business has a slow season
What is another name for a journal entry?
Book of Original entry
What does a general journal do?
Records information from transactions in chronological order
What does posting do?
It transfers information from a journal to the ledger
What is cross referencing?
Adding the posting reference that relates back to where the transaction is located
What refers to the individual accounts with their balances?
Trial balance
What are three things that always happen when making a correction?
Striking it out, updating above & initialling the correction
What is one difference between making a correction to a transaction that is posted versus a non-posted transaction?
Updating the running balance
When must you include an explanation of a correction?
When you are correcting the account a transaction is reflected in
What are the three steps leading up to the preparation of the trial balance?
- Transactions occur
- Analyze and record the transactions in the journal
- Post from the journal to the ledger
How many steps total are in the accounting cycle?
9
What is the shape of the accounting cycle?
Circle
What is journalizing?
The process of recording transactions in a journal
Are journal and ledgers kept in the same book?
NO
What accumulates to create a ledger?
Journals
How many formalities to a journal entry are there?
6
What in a journal is recorded first, debits or credits?
Debits
Is the explanation put above or below your debit and credits?
Below
How many blank lines should be between each journal entry?
One
When a journal effects 3 or more accounts, what is it called?
A compound journal entry
Does the month and year have to be recorded with each entry in the journal?
No
What, out of the date, gets recorded with each journal entry?
The day
When would you put the month and year again in a journal?
When you start a new page or month
What accounts are supplies considered?
Asset until used up
Once supplies get used up, where are they recorded?
Expense account
When do you record an expense? When they occur or when they are paid for?
When they occur
Are footings required in three column accounts?
NO
How many steps are there from posting a journal entry to the ledger?
4
What is recorded in the PR on the ledger?
General Journal #
What is recorded in the PR on the Journal?
The account number posted to
Must transactions be posted in the ledger in the order they occurred?
NO, they can also be posted with the debits first
Is the PR column always got info in it?
No, only once something has been posted
Can the trial balance balance but still be incorrect?
YES
What is the number one thing you should do if you find the trial balance doesn’t balance?
Stay Calm
If the difference on the trial balance is 10, 100, 1000, what does this mean?
There is likely a math error
If the difference is equal to one of another account, what does this mean?
Amount could have been omitted or wasn’t in the general journal
If you divide the difference of the trial balance by 2, what are you checking?
If the debit and credit were reversed
If the trial balance difference can be divided by 9, what does this mean?
A transposition or slide may have occurred
What is a transposition?
The re-arrangement of numbers / dyslexia
What is a slide?
Adding or deleting zeros when writing the number
Worst case when you can’t find the error in the trial balance, what do you do?
Take a break
