Accounting Principles and Processes

These flashcards cover key terms and concepts related to the accounting processes outlined in the lecture notes.

Temporary Accounts

Accounts that are closed at the end of an accounting period, including revenues, expenses, and withdrawals.

Closing Process

The procedure for resetting temporary account balances to zero, summarizing a period's revenues and expenses in the Income Summary account.

Income Summary Account

An account used to summarize revenues and expenses before closing it to the Owner's Capital.

Post-Closing Trial Balance

A list of permanent accounts and their balances after posting closing entries to ensure debits and credits are equal.

Accounting Cycle

The complete sequence of accounting processes, from analyzing transactions through preparing financial statements and closing entries.

Current Assets

Assets expected to be converted to cash or consumed within one year or within the company's operating cycle.

Plant Assets

Tangible long-lived assets used in the production or sale of goods and services.

Long-Term Liabilities

Obligations not due within one year or the operating cycle of the company.

Equity

The owner's claim on the assets of the company.

Current Ratio

A financial metric that assesses a company's ability to pay its short-term debts, calculated as current assets divided by current liabilities.