Chapter 4 Vocabulary

Question 1

current assets

Answer 1

cash and other assets that are expected to be converted to cash or sold or used up usually within one year or less

Question 2

notes receivable

Answer 2

amounts customers owe

Question 3

fixed assets/plant assets

Answer 3

permanent assets; land, equipment, buildings

Question 4

current liabilities

Answer 4

liabilities that will be due within a short time and that are to be paid out of current assets

Question 5

long-term liabilities

Answer 5

liabilities that will not be due for a long time

Question 6

permanent/real accounts

Answer 6

balance sheet accounts; cash accounts receivable equipment accumulated depreciation accounts payable capital stock and retained earnings

Question 7

temporary/nominal accounts

Answer 7

revenues and expenses; only relate to one period

Question 8

closing entries

Answer 8

temporaries account balances are transferred to permanent accounts at the end of the accounting period- entries that transfer these balances

Question 9

income summary/clearing account

Answer 9

temporary account that is only used during the closing process

Question 10

accounting cycle

Answer 10

begins with analyzing and journalizing transactions and ends with the post-closing trial balance