Groundhog Day
The recurring steps performed each reporting period in preparing financial statements.
What is the accounting cycle?
A document that is used internally by companies to help with adjusting and closing accounts and with preparing financial statements.
What is a worksheet?
Tangible assets that are both long-lived and used to produce or sell products and services.
What are plant assets?
An account only used for the closing process.
What is the Income Summary account?
The financial ratio used to help assess a company's ability to pay its debts in the near future.
What is the current ratio?
An optional step in the accounting cycle used for adjusting entries involving accrued revenues and accrued expenses.
What is preparing reversing entries?
The balances in these accounts are reflected in the credit column of the Income Statement section of a worksheet.
What are revenues?
This financial statement organizes assets and liabilities into subgroups.
What is a classified balance sheet?
Accounts that begin each accounting period with zero balances.
What are temporary accounts?
These accounts are always debited during the closing process.
What are revenue accounts?
The final required step in the accounting cycle to verify that total debits equal total credits for permanent accounts.
What is preparing the post-closing trial balance?
What is indicated if the Debit total exceeds the Credit total of the Income Statement columns on a work sheet.
What is a Net Loss?
Liabilities due to be paid or settled within one year or the company’s operating cycle, whichever is longer.
What are current liabilities?
The three types of financial statement accounts whose balances are set to zero at the end of each accounting period through the closing process.
What are revenue, expense, and withdrawal accounts?
The order of current asset accounts and current liability accounts listed on the balance sheet is determined on what basis.
What is how quickly they will be converted to, or paid in, cash?
The next step in the accounting cycle after preparing the financial statements.
What is closing temporary accounts?
Entries that are usually entered in the worksheet before they are entered in the general journal.
What are adjusting entries?
Long-term assets that benefit business operations but lack physical form.
What are intangible assets?
These accounts carry their ending balances into future periods.
What are permanent accounts?
The time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services.
What is the operating cycle?
The first five steps in the accounting cycle.
What are analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries?
All necessary amounts to prepare the balance sheet can be found in the Balance Sheet columns of the worksheet except this amount.
What is ending Owner's Capital?
The usual order in which the asset subgroups are presented on a classified balance sheet.
What is current assets, long-term investments, plant assets, and intangible assets?
The steps in the closing process.
What are: (1) close credit balances in revenue accounts to Income Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income Summary to Owner's Capital; (4) close Withdrawals account to Owner's Capital?
This is indicated when the Income Summary account has a credit balance.
What is Net Income?