Vocabulary
Accounting Concepts
Adjusting Entries
Closing Entries
Post Closing Trial Balance
100
Journal entries recorded to update general ledger accounts at the end of a fiscal period
adjusting entries
100
Applied when changes in financial information are reported for a specific period of time in the form of financial statements
Accounting Period Cycle
100
Where are the adjustment amounts found to journalize the adjusting entries in the general journal?
Adjustment columns of the worksheet
100
To close a temporary account, an amount equal to its balance is recorded where?
On the side opposite to its balance. For example, if an account has a credit balance of $3565, a debit of $3565 is recorded to close the account and create a 0 balance.
100
A trial balance that is prepared after the closing entries are posted
What is Post Closing Trial Balance?
200
Accounts that are not closed at the end of the fiscal period. They are used to accumulate information from one fiscal period to the next.
Permanent Accounts
200
What concept is being applied when: Supplies Expense has an up-to-date balance which is the value of the supplies used during the fiscal period.
Matching Expenses with Revenue
200
What source document is used in the DOC. NO. in the general journal for adjusting entries?
No source documents are used. The heading Adjusting Entries is written in the middle of the Account Title column of the general journal.
200
Name 3 permanent accounts
Assets: Cash, Petty Cash, Accounts Receivable, Pre-paid Insurance Liabilities: Accounts Payable Capital
200
What accounting concept is being described: The series of accounting activities included in recording financial information for a fiscal period
Accounting Period Cycle
300
Accounts that are closed at the end of the fiscal period to start the next fiscal period with a 0 balance.
Temporary Accounts: Sales, Expenses, Drawing and Income Summary
300
This accounting concept is applied when the same accounting procedures are followed in the same way each accounting period
Consistent Reporting
300
Explain why you would make an adjustment to the Prepaid Insurance account
Insurance is typically paid in advance. If six months of insurance coverage is paid in January it would be inaccurate to charge the January expenses with coverage for February through June. The expenses incurred would not match the revenue earned.
300
What is the normal balance for the Income Summary Account?
The Income Summary does not have a normal balance. It is determined if there is either a net income or a net loss.
300
What accounts are included in the Post Closing Trial Balance?
-Only the accounts with balances -Permanent Accounts -Assets, Liabilities, Owner's Capital
400
Journal entries used to prepare temporary accounts for a new fiscal period
closing entries
400
This accounting concept is applied when a source document is prepared for each transaction
Objective Evidence
400
Explain the adjusting entry to update the Supplies account-- 1. How is it figured 2. What account is debited 3. What account is credited
1. The balance of the supply account is subtracted from the supplies on hand. 2. Supplies Expense is debited for that amount 3. Supplies Account is credited for that amount which decreases the balance of that account
400
Name 3 temporary Accounts that get closed at the end of the fiscal period
1. Sales 2. Expenses 3. Drawing 4. Income Summary
400
What are the first 4 steps in the Accounting Cycle for a Service Business?
1. Analyze Transactions 2. Journalize Transactions in the General Journal 3. Post the Journal Entries to the Ledger Accounts 4. Prepare the Worksheet
500
What is a real account? What is a nominal account?
A real account is a permanent account A nominal account is a temporary account
500
This accounting concept is applied when a business's financial information is recorded and reported separately from the owner's personal financial information
Business Entity
500
What accounting concept is applied by posting adjusting entries?
Matching Expenses with Revenue
500
4 Steps for recording Closing Entries:
1. Close Sales into Income Summary 2. Close Expenses into Income Summary 3. Close Income Summary into Capital 4. Close the Drawing into Capital
500
What are the last four steps in the Accounting cycle for a Service Business?
5. Prepare Financial Statements (Balance Sheet and Income Statement) 6. Journalize Adjusting and Closing Entries 7. Post Adjusting and Closing Entries 8. Prepare a Post closing Trial Balance
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