The Accounting Cycle
The first step consists of two parts. The first is to check the documents for accuracy. The second is to analyze the transactions into these two categories.
What are debit and credit?
This journal is the only non-special one.
What is a general journal?
Merchandise can be defined as these commodities that a business purchases in order to sell
What are goods?
A work sheet summarizes these accounts.
What are general ledger accounts?
What 2 accounts do subtract to calculate net income or loss?
total revenue and total expenses
The second step requires that transactions be posted in this document.
What is a journal?
This journal focuses on purchases of merchandise on account.
What is a purchases journal?
This kind of business purchases goods, and then resells them.
What is a merchandising business?
What 2 financial statements does the Worksheet help us create?
Balance Sheet
Income Statement
What business did Brelje always use in giving examples about the accounting equation
Lemonade stand
A work sheet, along with this, are prepared in the fourth step.
What is a trial balance?
This journal is similar to a purchases journal, except it focuses on the sales of merchandise on account.
What is a sales journal?
This kind of business does something similar to a merchandising business, except that it resells it's good to other merchandising businesses.
What is a wholesale merchandising business?
At the end of a work sheet, it is determined which one of these two opposites the business experienced.
What is net loss and net income?
Income summary is a : A) temporary account or B) permanent account
temporary account?
The sixth step uses information taken from the work sheet to prepare this.
What are closing entries?
This journal exclusively looks at cash receipts
What is a cash receipts journal?
The only differnce between this business and a wholesale merchandising business is that this one sells directly to those who consume the good.
What is a retail merchandising business?
Since the order of accounts placed on a worksheet is determined by their placement in a chart of accounts, these types of accounts are last on the list
What are expense accounts?
Sing the chorus of the accounting song
The eigth and final step requires the preparation of this document.
What is a post-closing trial balance?
This journal looks at cash payments
What is a cash payments journal?
The goods that a business on hand to sell is called this.
What is merchandise inventory?
There are four columns to a work sheet: trial balance, income statement, balance sheet, and this.
What are adjustments?
What is the source document included inside a box when we purchase merchandise and will pay later
Invoice