Recording Adjusting and Closing Entries

Vocabulary

100

Journal entries recorded to update general ledger accounts at the end of a fiscal period

What are adjusting entries?

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.

What are Permanent Accounts?

300

Accounts that are closed at the end of the fiscal period to start the next fiscal period with a 0 balance.

What are Temporary Accounts?

400

Any period of consecutive 12 months

What is a fiscal year?

500

Another name for real accounts

What is a permanent account?

Accounting Concepts

100

Applied when changes in financial information are reported for a specific period of time in the form of financial statements

Accounting Period Cycle

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

300

This accounting concept is applied when the same accounting procedures are followed in the same way each accounting period

Consistent Reporting

400

This accounting concept is applied when a source document is prepared for each transaction

Objective Evidence

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

Adjusting Entries

100

Location of the adjustment amounts found to journalize the adjusting entries in the general journal

What are the adjustment columns of the worksheet?

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.

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.

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

500

What accounting concept is applied by the use of adjusting entries?

Matching Expenses with Revenue

Closing Entries

100

Journal entries used to prepare temporary accounts for a new fiscal period

What are closing entries?

200

Report prepared at the end of the fiscal period to test the equality of the general ledger after all adjusting and closing entries have been posted

What is the Post Closing Trial Balance?

300

The normal balance for the Income Summary Account

What is it does not have a normal balance. It is determined if there is either a net income or a net loss.

400

After the closing entries have been posted, all temporary accounts should have

What is a zero balance?

500

Order for recording Closing Entries:

What is IncSt credit balances, IncSt debit balances, and then IncSum to RE?

End of the Cycle

100

A trial balance that is prepared after the closing entries are posted

What is Post Closing Trial Balance?

200

The series of accounting activities included in recording financial information for a fiscal period

What is the Accounting Period Cycle?

300

Accounts that are included in the Post Closing Trial Balance

What are Permanent Accounts with balances?

400

Comparison of the same items on financial statements for two or more accounting periods or dates and the determination of changes

What is horizontal analysis?

500

The last step in the Accounting cycle 

What is Post closing Trial Balance?