Week2

Question 1

Accounting period

Answer 1

Breaks down company financial information into specific time spans and can cover a month, quarter, half-year, or full year.

Question 2

Accrual

Answer 2

Type of adjusting entry that accumulates during a period, where an amount was previously unrecorded.

Question 3

Accrued expense

Answer 3

Expense incurred in a period but not yet recorded, and no money has been paid.

Question 4

Accrued revenue

Answer 4

Revenue earned in a period but not yet recorded, and no money has been collected.

Question 5

Adjusted trial balance

Answer 5

List of all accounts in the general ledger, including adjusting entries, which have nonzero balances.

Question 6

Adjusting entries

Answer 6

Update accounting records at the end of a period for any transactions that have not yet been recorded.

Question 7

Book value

Answer 7

Difference between the asset’s value (cost) and accumulated depreciation; also, value at which assets or liabilities are recorded in a company’s financial statements.

Question 8

Calendar year

Answer 8

Reports financial data from January 1 to December 31 of a specific year.

Question 9

Contra account

Answer 9

Account paired with another account type that has an opposite normal balance to the paired account; reduces or increases the balance in the paired account at the end of a period.

Question 10

Deferral

Answer 10

Prepaid expense and revenue accounts that have delayed recognition until they have been used or earned.

Question 11

Fiscal year

Answer 11

Twelve-month reporting cycle that can begin in any month, and records financial data for that twelvemonth consecutive period.

Question 12

Useful life

Answer 12

Time period over which an asset cost is allocated.

Question 13

Closing

Answer 13

Returning the account to a zero balance.

Question 14

Closing entry

Answer 14

Prepares a company for the next accounting period by clearing any outstanding balances in certain accounts that should not transfer over to the next period.

Question 15

Intangible asset

Answer 15

Asset with financial value but no physical presence; examples include copyrights, patents, goodwill, and trademarks.

Question 16

Operating cycle

Answer 16

Amount of time it takes a company to use its cash to provide a product or service and collect payment from the customer.

Question 17

Permanent (real) account

Answer 17

Account that transfers balances to the next period, and includes balance sheet accounts, such as assets, liabilities, and stockholder’s equity.

Question 18

Property, plant, and equipment

Answer 18

Tangible assets (those that have a physical presence) held for more than one operating cycle or one year, whichever is longer.

Question 19

Temporary (nominal) account

Answer 19

Account that is closed at the end of each accounting period, and includes income statement, dividends, and income summary accounts.