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Inter ACCT 1 exam 1
chap 3
| Term | Definition |
|---|---|
| balance sheet accounts | |
| Nominal (temporary) accounts | income statement accounts |
| Journal | book of original entry |
| ledger | final entry, list of account |
| postin | transferring from J to L |
| adjusting entries | Entries made at the end of an accounting period to bring all accounts up to date on an accrual basis, |
| CLOSING ENTRIES | The formal process by which the enterprise reduces all nominal accounts to zero and determines and transfers the net income or net loss to an owners’ equity account. |
| balance sheet | fi nancial condition of the enterprise at the end of a period. |
| income statement | results of operations during the period |
| statement of cash fl ows | reports the cash provided and used by operating, investing, and fi nancing activities during the period. |
| statement of retained earnings | reconciles the balance of the retained earnings account from the beginning to the end of the period. |
| Accouting cycle | journalize, post, trial balance, adjustments, fin statement prep, closing entries, post closing trial balance, |
| Defferals | expenses or revenues that are recognized at a date later than the point when cash was originally exchanged. The two types of deferrals are prepaid expenses and unearned revenues. statements overstated otherwise |
| accruals | accrued revenues and accrued expenses, statement understaed otherwise |
| Prepaid expense adjusting reason | Expenses paid in cash before they are used or consumed |
| unearned revenue adjusting reason | Cash received before services are performed |
| accrued revenues adjusting reason | Revenues for services performed but not yet received in cash or recorded. |
| Accrued expenses adjusting reason | Expenses incurred but not yet paid in cash or recorded. |
| prepaid expense adjusting entry | debit prepaid expense credit prepaid insurances (asset) |
| unearned revenue adjusting entry | debit unearned revenue (liability) credit sales/services revenue account |
| Supplies adjusting entries | supplies used up debit supplies expense ( credit supplies |
| insurance adjusting entries | insurance depreciating from date purchased deb insurance expense cred prepaid insurance |
| depreciaton adjusting entries | debit depreciation expense credit accumulated depreciation-equipment |
| book valjue | original price - accumulated depreciation |
| entry for performing services or providing product before collecting payment | Accrued reveneue A. Recievable/cash debit service/sale revenue credit |
| calculating interst | face value*rate*x months over 12 months |
| adjusting interest entry | debit interest expense credit interest payable |
| adjusting wages entry | debit salaries and wages expense credit salaries and wages payable |
| bad debt entries | debit bad debt expense credit allowance for doubt ful accounts |
| closing steps | 1.) close revenue accounts, 2.] close expense accounts, 3.]close income summary accounts, 4.] close dividends |
| 1.) close revenue accounts, | debit revenue accounts, credit income summary (if net loss vice versa) |
| 2.] close expense accounts, | debit income summary credit expense accounts |
| 3.]close income summary accounts, | if balance on credit side of income summary, debit balance to retained earnings (net income) if balance on debit side of income summary, creidt balance to retained earnings (net loss) |
| 4.] close dividends/withdrawals | debit retained earnings credit dividends/withdrawals |
| income statement format | netsales- costof goods sold=gross income-expenses-intersest expense+interest revenue-income tax=netincome |
| Statement of Retained Earnings format | Retained earnings beginning of period+income-dividends/withdrawals=retained earnings end of period |
| Current assets | stuff that could be used up within a year cash, recievables, inventory, prepaid insurance, prepaid rent. |
| Property Plant and equipment | equipment-accumulated depreciation |
| current liabilites | notes, accounts, taxes payables |
| longterm liablities | bonds payable |
| stock holders equity | placed after liabilities on blance shets common stock issued and outstanding+retained earnings=total stockholdrs equity |
Created by:
Virajasaur
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