Accounting Terms Chapter 4

Front 1

Internal documents are called

Back 1

working papers

Front 2

5 steps in preparing worksheet

Back 2

1 Enter unadjusted trial bal
2 Enter adjustments
3 Prepare adjusted trial bal
4 Sort adj trial bal to fin state
5 Total statement columns, compute income or loss and balance columns

Front 3

Adjusted Trial Balance Amounts to Income Statement

Back 3

Income Statement
Exp - Debit column
Revenue - Credit column

Front 4

Adjusted Trial Balance Amounts to Balance Sheet & Statement of Owners Equity

Back 4

Assets & Withdrawls - Debit
Liabilities & Owner Cap - Credit column

Front 5

Income Statement -
net income or net loss

Back 5

Credit totals exceed Debit = net income
Debit totals exceed Credit = net loss

Front 6

Net income added to Credit column

Back 6

Add to Owner's Capital

Front 7

Net loss added to the Debit column

Back 7

Subtract from Owner's Capital

Front 8

Temporary Accounts

Back 8

Revenue
Expenses
Owner's Withdrawls
Income Summary

Front 9

Permanent Accounts
carry ending balances into next period
all Balance Sheet Accounts

Back 9

Assets
Libabilities
Owner Capital

Front 10

Revenue, Expense, and Withdrawl accounts must begin each period with___ balances

Back 10

Zero

Front 11

Owner's capital must reflect prior periods' ____, _____, ____

Back 11

Revenues,
Expenses
Withdrawls

Front 12

To close temporary accounts, we transfer balances to what account

Back 12

Income Summary

Front 13

Income Summary
def

Back 13

Temporary account that contains a credit for the sum of all revenues and a debit for the sum of all expenses

Front 14

4 Step Closing Process

Back 14

1 Close revenue accounts
2 Close expense accounts
3 Close income summary acct
4 Close withdrawls account

Front 15

Post-closing trial balance
def

Back 15

List of permanent accounts and their balances from the ledger after all closing entries have been journalized and posted

Front 16

Unclassified Balance Sheet
def

Back 16

Items are broadly grouped into assest, liabilities, and equity

Front 17

Classified Balance Sheet
def

Back 17

Organizes assets and liabilities into important subgroups that provide more information to decision makers

Front 18

Operating Cycle
def

Back 18

Time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services

Front 19

Current assets & current liabilitiest - how listed

Back 19

Listed in order of how quickly they will be converted to, or paid in cash

Front 20

Current Assets

Back 20

Cash or resources expected to be sold, collected, or used within 1 yr

Front 21

Current Assets
examples

Back 21

Cash
Short-term investments
Accounts Receivable
Short-term notes receivable
goods for sale

Front 22

Prepaid Expenses
examples
Not converted to cash

Back 22

Prepaid Insurance
Prepaid Rent
Office Supplies
Store Supplies

Front 23

Long-Term Investments

Back 23

Notes receivable and investments in stocks and bonds

Front 24

Plant Assets

Back 24

Tangible that are long-lived and used to produce or sell products and services
Equipment, machinery, buildings, land used to produce

Front 25

Intangible Assets

Back 25

Long-term resources that benefit business operations
Patents, tradmarkes, copyrights, franchises, and goodwill

Front 26

Current Liabilities

Back 26

Obligations due to be paid or settled within 1 yr
Accounts payable, Notes payable, wages payable, taxes payable, interest payable, & unearned revenues

Front 27

Long-Term Liabilities

Back 27

Obligations not due within 1 yr
Notes payable, mortgages payable, bonds payable, and lease obligations

Front 28

Equity

Back 28

Owner's claim on assets

Front 29

Current Ratio

Back 29

Current Ration =
Current assets/Current Liab