Why are adjustments made to supplies and prepaid insurance on the journal?
To show the value of supplies and prepaid insurance used during the fiscal period.
200
Drawing, Income Summary, Revenue, and Expenses are considered ______ accounts.
Temporary
200
What accounts are included on the post-closing trial balance?
Permanent: assets, liabilities and capital
200
The second step of the accounting cycle is _______. What do you ______?
Journalize, we journalize transactions
200
Why do we deduct the drawing from the capital account and not the income summary?
Drawing is not a revenue or expense account. Therefore, the drawing account is closed through the capital account.
300
What should be added to the Post Ref box on the journal?
Account Number
300
Definition: Journal entries used to prepare temporary accounts for a new fiscal period are called _______.
closing entries
300
What needs to be done after closing entries have been made to the journal?
update the general ledgers
300
Definition: the series of accounting activities included in recording financial information for a fiscal period.
Accounting Cycle
300
Name a few accounts that could be found on the post-closing trial balance.
Cash, petty cash, accounts payable, accounts receivable, capital
400
Why are adjustments journalized?
journal entries are recorded to update general ledger
400
What are the four closing entries?
sales, expenses, net income or net loss, drawing
400
All accounts in the general ledger labeled in the 100s are considered ____
assets
400
The 5th step of the accounting cycle is preparing ______ _____. What are _______ _______?
Financial Statements, Income Statement and Balance Sheet
400
Why do we post journal entries to the account ledgers?
separate the amounts from the journal
500
Where is the information obtained to journalize adjusting entries?
work sheet
500
Do you include insurance expense and supplies expense on the closing entries, even if those accounts are on the adjusting entries?
Yes, we made adjustments now you need to close those temporary accounts
500
The accounts that are labeled in the 500's in the general ledger are considered ____?
expenses/costs
500
Give me a brief list of the accounting cycle.
Analyze transactions, journalize, post, prepare work sheet, prepare financial statements, post adjusting and closing entries, post entries, and prepare post-closing trial balance
500
Why are temporary accounts omitted from a post-closing trial balance?