Module 4- accounting cycle & info. systems

Question 1

8 steps in the accounting process

Answer 1

1. Analyze transactions by examining source documents.
2. Journalize transactions in the general journal
3. Post entries to the respective accounts in the general ledger
4. Prepare a trial balance of the unadjusted accounts and begin the trial balance worksheet
5. Journalize and post adjusting journal entries, prepare adjusted trial balance, and complete worksheet
6. Prepare the financial statements
7. Journalize and post closing entries
8. Prepare the post-closing trial balance

Question 2

source document

Answer 2

proof that a business transaction occurred (receipt, check, etc.)

Question 3

posting

Answer 3

is the process of recording in the general ledger account the information contained in the journal 
- it can be done:
the time the transaction is journalized.
the end of the day, week, month.
-when the page gets full

Question 4

accrual basis of accounting

Answer 4

revenues are recorded when a company makes a sale or performs a service, regardless of when the company receives payment for the sale or the service,

Question 5

matching concept

Answer 5

matching revenues with expenses

Question 6

cross indexing

Answer 6

the placing of the account number in the general journal and the general journal page in the ledger account (referencing)

Question 7

compound journal entries

Answer 7

when the Journal entries for the transactions include more than one debit or credit

Question 8

prepaid expenses

Answer 8

Expenses paid in cash before they are used of consumed.

Question 9

unearned revenues

Answer 9

cash received before the service was performed

Question 10

Accrued Revenues

Answer 10

Revenues for services performed but not yet received in cash or recorded

Question 11

Accrued Expenses

Answer 11

expenses incurred but not yet paid in cash or recorded.

Question 12

Deferrals

Answer 12

prepaid expenses or unearned revenues

Question 13

worksheet

Answer 13

is a columnar sheet of paper like exel on which accountants summarize information needed to make the adjusting and closing entries and to prepare financial statements

Question 14

income summary

Answer 14

Expenses > total revenues = debit balance= net loss.

revenue>expenses=credit balance= net income

Question 15

post closing trial balance

Answer 15

is a trial balance taken after the closing entries have been posted. the only accounts that should be open are assets, liabilities and owners equity.

Question 16

classified balance sheet

Answer 16

contains the same major categories (assets, liabilities, and owners equity). but importantly breaks up assetes and liabilities into current and noncurrent assests and liabilities.