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Bookkeeping & Accounting > The Accounting Cycle > Flashcards

The Accounting Cycle Flashcards

Learn about the accounting cycle

1
Q

_______ _______ is the process of identifying, recording, summarizing and analyzing an entity’s financial transactions and reporting them in financial statements.

A

Financial accounting

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2
Q

Financial accounting is the process of _______, _______, _______ and _______ an entity’s financial transactions and reporting them in financial statements.

A

Identifying, recording, summarizing and analyzing

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3
Q

Financial accounting is the process of identifying, recording, summarizing and analyzing an entity’s _______ _______ and reporting them in financial statements.

A

financial transactions

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4
Q

Financial accounting is the process of identifying, recording, summarizing and analyzing an entity’s financial transactions and reporting them in _______ _______.

A

financial statements

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5
Q

What is the first step in the accounting cycle?

A

identify transactions

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6
Q

What is the second step in the accounting cycle?

A

prepare journal entries

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7
Q

What does “double-entry” accounting imply?

A

That each transaction affects at least two accounts

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8
Q

What is a journal entry?

A

A record of a financial transaction

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9
Q

Debits and credits should always _______ each other.

A

equal

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10
Q

The core principle of _______ _______: the stuff that your business owns is equal to the stuff that your business owes.

A

financial accounting

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11
Q

The core principle of financial accounting: the stuff that your business _______ is equal to the stuff that your business _______.

A

owns, owes

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12
Q

The core principle of financial accounting: the stuff that your business owns is _______ to the stuff that your business owes.

A

equal

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13
Q

Give two examples of assets.

A

cash and inventory

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14
Q

The stuff that your business owes is made up of _______ and _______.

A

liabilities and equity

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15
Q

The stuff that your business _______ is made up of liabilities and equity.

A

owes

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16
Q

Liabilities are owed to _______ _______.

A

third parties

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17
Q

_______ are owed to third parties.

A

Liabilities

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18
Q

Liabilities are _______ to third parties.

A

owed

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19
Q

_______ is owed to owners.

A

Equity

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20
Q

Equity is owed to _______.

A

owners

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21
Q

Equity is _______ to owners.

A

owed

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22
Q

_______ is your claim on the business’s net assets.

A

Equity

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23
Q

Equity is your _______ on the business’s net assets.

A

claim

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24
Q

Equity is your claim on the business’s net _______.

A

assets

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25
Q

What is the accounting equation?

A

Assets = Liabilities + Equity

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26
Q

_______ represent the sources that economic benefit flows from.

A

Credits

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27
Q

Credits represent the _______ that economic benefit flows _______.

A

sources, from

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28
Q

_______ represent the destinations that economic benefit flows to.

A

Debits

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29
Q

Debits represent the _______ that economic benefit flows _______.

A

destinations, to

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30
Q

Credits represent the sources that _______ _______ flows from.

A

economic benefit

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31
Q

Debits represent the destinations that _______ _______ flows to.

A

economic benefit

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32
Q

What is the third step in the accounting cycle?

A

Post to general ledger

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33
Q

The _______ _______ is a database that stores a complete record of all accounts and journal entries.

A

general ledger

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34
Q

The general ledger is a _______ that stores a complete record of all accounts and journal entries.

A

database

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35
Q

The general ledger is a database that stores a complete _______ of all accounts and journal entries.

A

record

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36
Q

The general ledger is a database that stores a complete record of all _______ and _______ _______.

A

accounts and journal entries

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37
Q

An _______ is the place where we record, sort, and store all financial transactions that affect a related group of items.

A

account

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38
Q

An account is the place where we _______, _______, and _______ all financial transactions that affect a related group of items.

A

record, sort, and store

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39
Q

An account is the place where we record, sort, and store all _______ _______ that affect a related group of items.

A

financial transactions

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40
Q

Broadly speaking, there are _______ types of accounts.

A

six

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41
Q

Name the six types of accounts.

A

(1) Assets (2) Liabilities (3) Equity (4) Revenue (5) Expenses (6) Dividends (aka Withdrawals)

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42
Q

_______, _______ and _______ are part of the equity portion of the accounting equation.

A

Revenue, expenses, and dividends

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43
Q

Revenue, expenses and dividends are part of the _______ portion of the accounting equation.

A

equity

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44
Q

Revenue, expenses and dividends are part of the equity portion of the _______ _______.

A

accounting equation

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45
Q

What is the fourth step in the accounting cycle?

A

Prepare unadjusted trial balance

46
Q

A _______ _______ is an internal accounting report showing the closing balance of all general ledger accounts.

A

trial balance

47
Q

A trial balance is an _______ accounting report showing the closing balance of all general ledger accounts.

A

internal

48
Q

A trial balance is an internal _______ _______ showing the closing balance of all general ledger accounts.

A

accounting report

49
Q

A trial balance is an internal accounting report showing the _______ _______ of all general ledger accounts.

A

closing balance

50
Q

A trial balance is an internal accounting report showing the closing balance of all _______ _______ accounts.

A

general ledger

51
Q

A _______ _______ can help us check for errors, but its primary purpose is to be used in making financial statements.

A

trial balance

52
Q

A trial balance can help us check for _______, but its primary purpose is to be used in making financial statements.

A

errors

53
Q

A trial balance can help us check for errors, but its primary purpose is to be used in making _______ _______.

A

financial statements

54
Q

A _______ _______ consists of all of your accounts and their closing balances.

A

trial balance

55
Q

A trial balance consists of all of your _______ and their closing balances.

A

accounts

56
Q

A trial balance consists of all of your accounts and their _______ _______.

A

closing balances

57
Q

A _______ _______ is the cumulative total of all transactions affecting an account.

A

closing balance

58
Q

A closing balance is the _______ _______ of all transactions affecting an account.

A

cumulative total

59
Q

A closing balance is the cumulative total of all _______ affecting an account.

A

transactions

60
Q

A closing balance is the cumulative total of all transactions affecting an _______.

A

account

61
Q

What is the fifth step in the accounting cycle?

A

Make adjusting entries

62
Q

_______ _______ are journal entries posted at the end of an accounting period to bring a business’s books in line with the accrual method of accounting.

A

Adjusting entries

63
Q

Adjusting entries are _______ entries posted at the end of an accounting period to bring a business’s books in line with the accrual method of accounting.

A

journal

64
Q

Adjusting entries are journal entries posted at the _______ of an accounting period to bring a business’s books in line with the accrual method of accounting.

A

end

65
Q

Adjusting entries are journal entries posted at the end of an _______ _______ to bring a business’s books in line with the accrual method of accounting.

A

accounting period

66
Q

Adjusting entries are journal entries posted at the end of an accounting period to bring a business’s books in line with the _______ method of accounting.

A

accrual

67
Q

The two main rulebooks of financial accounting are the _______ _______ _______ _______ (__ __ __ __) and the Generally Accepted Accounting Principles (GAAP).

A

International Financial Reporting Standards (IFRS)

68
Q

The two main rulebooks of financial accounting are the International Financial Reporting Standards (IFRS) and the _______ _______ _______ _______ (__ __ __ __).

A

Generally Accepted Accounting Principles (GAAP)

69
Q

Both _______ and _______ require you to follow the accrual method of accounting.

A

IFRS and GAAP

70
Q

Both IFRS and GAAP require you to follow the _______ method of accounting.

A

accrual

71
Q

In the _______ method, revenue is recognized as it is earned and expenses are recorded as they are incurred.

A

accrual

72
Q

In the accrual method, _______ is recognized as it is earned and expenses are recorded as they are incurred.

A

revenue

73
Q

In the accrual method, revenue is recognized as it is _______ and expenses are recorded as they are incurred.

A

earned

74
Q

In the accrual method, revenue is recognized as it is earned and _______ are recorded as they are incurred.

A

expenses

75
Q

In the accrual method, revenue is recognized as it is earned and expenses are recorded as they are _______.

A

incurred

76
Q

What is the seventh step in the accounting cycle?

A

Create financial statements

77
Q

What is the sixth step in the accounting cycle?

A

Prepare adjusted trial balance

78
Q

_______ _______ are accounting reports that summarize a business’s activities over a period of time. These are external reports designed to give your investors, lenders, and creditors an understanding of your business’s financial health.

A

Financial statements

79
Q

Financial statements are _______ _______ that summarize a business’s activities over a period of time. These are external reports designed to give your investors, lenders, and creditors an understanding of your business’s financial health.

A

accounting reports

80
Q

Financial statements are accounting reports that summarize a business’s _______ over a period of time. These are external reports designed to give your investors, lenders, and creditors an understanding of your business’s financial health.

A

activities

81
Q

Financial statements are accounting reports that summarize a business’s activities over a _______ of _______. These are external reports designed to give your investors, lenders, and creditors an understanding of your business’s financial health.

A

period of time

82
Q

Financial statements are accounting reports that summarize a business’s activities over a period of time. These are _______ reports designed to give your investors, lenders, and creditors an understanding of your business’s financial health.

A

external

83
Q

Financial statements are accounting reports that summarize a business’s activities over a period of time. These are external reports designed to give your _______, _______, and _______ an understanding of your business’s financial health.

A

investors, lenders, and creditors

84
Q

Financial statements are accounting reports that summarize a business’s activities over a period of time. These are external reports designed to give your investors, lenders, and creditors an understanding of your business’s _______ _______.

A

financial health

85
Q

The three main ________ _______ are the balance sheet, income statement, and cash flow statement.

A

financial statements

86
Q

The three main financial statements are the _______ _______, _______ _______, and _______ _______ _______.

A

balance sheet, income statement, and cash flow statement

87
Q

The three main _______ _______ can all be built using your adjusted trial balance.

A

financial statements

88
Q

The three main financial statements can all be built using your _______ _______ _______.

A

adjusted trial balance

89
Q

The _______ _______ gives us a snapshot of your business’s assets, liabilities, and equity as a single point in time, which can teach the readers about your financial position. They can see what you owe and what you own at the end of your financial year.

A

balance sheet

90
Q

The balance sheet gives us a snapshot of your business’s _______, _______, and _______ as a single point in time, which can teach the readers about your financial position. They can see what you owe and what you own at the end of your financial year.

A

assets, liabilities, and equity

91
Q

The balance sheet gives us a snapshot of your business’s assets, liabilities, and equity as a single point in time, which can teach the readers about your financial _______. They can see what you owe and what you own at the end of your financial year.

A

position

92
Q

The balance sheet gives us a snapshot of your business’s assets, liabilities, and equity as a single point in time, which can teach the readers about your financial position. They can see what you _______ and what you _______ at the end of your financial year.

A

owe, own

93
Q

The balance sheet gives us a snapshot of your business’s assets, liabilities, and equity as a single point in time, which can teach the readers about your financial position. They can see what you owe and what you own at the _______ of your financial year.

A

end

94
Q

The balance sheet gives us a snapshot of your business’s assets, liabilities, and equity as a single point in time, which can teach the readers about your financial position. They can see what you owe and what you own at the end of your _______ _______.

A

financial year

95
Q

The _______ _______ summarizes your business’s revenues and expenses over a period of time. It gives the readers a glimpse of your financial performance and profitability.

A

income statement

96
Q

The income statement summarizes your business’s _______ and _______ over a period of time. It gives the readers a glimpse of your financial performance and profitability.

A

revenues and expenses

97
Q

The income statement summarizes your business’s revenues and expenses over a period of time. It gives the readers a glimpse of your financial _______ and _______.

A

performance and profitability

98
Q

_______ and ______ _______ are not the same, unless you are using the cash basis method of accounting.

A

Profit and cash flow

99
Q

Profit and cash flow are _______ the same, unless you are using the cash basis method of accounting.

A

not

100
Q

Profit and cash flow are not the same, unless you are using the _______ _______ method of accounting.

A

cash basis

101
Q

The _______ _______ _______ summarizes your cash inflows and outflows over the same period of time.

A

cash flow statement

102
Q

The cash flow statement summarizes your cash _______ and _______ over the same period of time.

A

inflows and outflows

103
Q

What is the eighth step in the accounting cycle?

A

Post closing entries

104
Q

A _______ _______ is a journal entry that transfers balances from temporary accounts to permanent accounts in the balance sheet.

A

closing entry

105
Q

A closing entry is a _______ entry that transfers balances from temporary accounts to permanent accounts in the balance sheet.

A

journal

106
Q

A closing entry is a journal entry that _______ balances from temporary accounts to permanent accounts in the balance sheet.

A

transfers

107
Q

A closing entry is a journal entry that transfers _______ from temporary accounts to permanent accounts in the balance sheet.

A

balances

108
Q

A closing entry is a journal entry that transfers balances from _______ accounts to _______ accounts in the balance sheet.

A

temporary, permanent

109
Q

A closing entry is a journal entry that transfers balances from temporary accounts to permanent accounts in the _______ _______.

A

balance sheet

110
Q

List all eight steps of the accounting cycle in order.

A

(1) identify transactions (2) prepare journal entries (3) post to general ledger (4) unadjusted trial balance (5) post adjusting entries (6) adjusted trial balance (7) create financial statements (8) post closing entries

Bookkeeping & Accounting (6 decks)

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