Chapter 4- Completion of the Accounting Cycle Flashcards
0
Q
What are the temporary accounts?
A
Revenue, Expenses, Drawings
1
Q
What is the purpose of closing entries?
A
Updates the owners capital account
2
Q
What are the permanent accounts?
A
Assets, Liabilities, Capital
3
Q
What is a reversing entry?
A
reverses an adjusting entry made in the previous accounting period
4
Q
What is a correcting entry?
A
A journal entry to correct an error
5
Q
What is liquidity?
A
The ability to pay short term obligations
6
Q
How do you calculate working capital?
A
Current assets-current liabilities
7
Q
How do you calculate the current ratio?
A
Current assets/current liabilities
