Exam 2 Review Flashcards
Adjustments are made at the _____ of every ____________ to report _____________________ in the proper period and _______________________ at appropriate amounts
Adjustments are made at the end of every accounting period to report revenues and expenses in the proper period and assets and liabilities at appropriate amounts
Adjustments involve both ________ and __________ accounts
Adjustments involve both income statement and balance sheet accounts
Define deferral adjustments
Are used to reduce amounts previously deferred on the balance sheet and increase corresponding accounts on the income statement
What are accrual adjustments
Accrual adjustments are needed when a transaction has occurred but has not yet been recorded in the accounting system
Each accrual adjustment involves a pair of ____________ accounts, or _____________ accounts.
Each accrual adjustment involves a pair of asset and revenue accounts, or liability and expense accounts.
Each deferral adjustment involves a pair of ____________ accounts, or _____________ accounts.
Each deferral adjustment involves a pair of asset and expense accounts, or liability and revenue accounts.
Adjusting journal entries (AJEs)
Indicate the effects of period’s adjustments in a debits-equal-credits format.
Define depreciation
Process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used.
Define contra-account
An account that is an offset to or reduction of another account/ to present asset at book value or carrying value
Define accumulated depreciation
The contra-account that is created to keep track of all the depreciation recorded against the long-lived asset; like a negative asset account.
Define temporary accounts
Track financial results for a limited period of time by having their balances zeroed out at the end each accounting year. All revenue, expense, and dividends declared accounts are temporary accounts
Define Permanent account
Track financial results from year to year by carrying their ending balances into the next year. The retained earnings account, like all other balance sheet accounts, is a permanent account because its ending balance from one year becomes its beginning balance for the following year
What is the post closing trial balance
Prepared at the last step of the accounting cycle as a final check that total debits still equal total credits and that all temporary accounts have been closed.
Net book value =. ? - ?
Net book value = equipment - accumulated depreciation
Depreciation per period = ?
Depreciation per period = (cost-salvage value)/ # of periods in assets useful life
