Definitions 1
The length of time for which a business summarizes its financial information and reports its financial performance
Fiscal Period
Reporting income when it is earned and expenses when they are incurred
Accrual Basis of Accounting
The difference between total revenue and total expenses when total expenses are greater
Net Loss
Credit or Debit?
Adjusting Entries: Insurance Expense
Debit
A fiscal period consisting of 12 consecutive months
Fiscal Year
Reporting income when the cash is received and expenses when the cash is paid
Cash Basis of Accounting
Journal entries recorded to update general ledger accounts at the end of a fiscal period
Adjusting Entries
Credit or Debit?
Adjusting Entries: Supplies
Credit
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements
Work Sheet
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period
Adjustments
A trial balance prepared after adjusting entries are posted
Adjusted Trial Balance
Credit or Debit?
Income Summary
None; left blank in the Work Sheet
A proof of equality of debits and credits in a general ledger
Trial Balance
A financial statement that reports assets, liabilities, and owner’s equity on a specific date
Balance Sheet
A financial statement showing the revenue and expenses for a fiscal period
Income Statement
In a work sheet, which accounts go into the "Balance Sheet" columns?
Everything above Income Summary:
- Assets (Cash, Acc. Rec., Supplies, Prepaid Insurance, Petty Cash)
- Liabilities (Acc. Pay.)
- Owner's Equity (Capital, Drawing)
Cash paid for an expense in one fiscal period that is not used until a later period
Prepaid Expense
The difference between total revenue and total expenses when total revenue is greater
Net Income
An accountant who has passed the uniform certified public accounting exam and net the licensing requirement for a state
CPA
In a work sheet, which accounts go into the "Income Statement" columns?
Everything below Income Summary:
- Revenue (Sales)
- Expenses (Cash short and over, advertising exp, miscellaneous exp, supplies exp, insurance exp, utilities exp, rent exp, etc)