38276449
Description
Flashcards by Stephanie Poole, updated more than 1 year ago
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Created by Stephanie Poole
about 2 years ago
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| Question | Answer |
| Accounting cycle | a series of accounting activities that a business performs each accounting period |
| Accounting Period | one month, one quarter, or one year |
| Chart of accounts | The Chart of Accounts is a list of all accounts used to accumulate information about assets, liabilities, owners’ equity, revenues, and expenses. Create a Chart of Accounts when the business is established and modify the Chart of Accounts as needed over time. |
| Transactions | During the accounting period, record transactions with customers, vendors, employees, and owners |
| Trial Balance | A Trial Balance is also referred to as an unadjusted Trial Balance because it is prepared before adjustments. A Trial Balance lists each account and the account balance at the end of the accounting period. Prepare a Trial Balance to verify that the accounting system is in balance—total debits should equal total credits. |
| Adjustments | At the end of the accounting period before preparing financial statements, make any adjustments necessary to bring the accounts up to date. Adjustments are entered in the Journal using debits and credits. |
| Adjusted Trial Balance | Prepare an Adjusted Trial Balance (a Trial Balance after adjustments) to verify that the accounting system still balances. If additional account detail is required, print the general ledger (the collection of all the accounts listing the transactions that affected the accounts). |
| Financial Statements | Prepare financial statements for external users (Profit and Loss, Balance Sheet, and Statement of Cash Flows). Prepare income tax summary reports and management reports. |
| Adjusting entries | Record adjustments necessary to bring the accounts up to date at the end of an accounting period |
| Prepaid items | Items that are prepaid, such as prepaid insurance or prepaid rent. |
| Unearned items | Items that a customer has paid us for, but we have not provided the product or service. |
| Accrued expenses | Expenses that are incurred but not yet paid or recorded. |
| Accrued revenues | Revenues that have been earned but not yet collected or recorded. |
| The accrual basis of accounting | attempts to match expenses with the revenue (income) they generate. The cash basis records revenues (income) when cash is received and records expenses when cash is paid. The accrual basis attempts to record revenue (income) in the accounting period when it is earned (the product or service is provided) regardless of when the cash is received. The accrual basis attempts to record expenses in the accounting period it is incurred regardless of when the cash is paid. |
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