Chapter 4 complete the accounting cycle

What are taxes?

Government mandated fees that finance government activities. (income tax, sales tax, property tax).

Is there a difference between the unadjusted trial balane and the adjusted trial balance?

YES, ADJUSTING ENTRIES!!

What is a statment of cash flows?

It provides relevant information about the cash receipts and cash payments of a company over a given period of time.

Examples of operating cash flows

rent, wages, receiving cash, interest on loans

Examples of investing cash flows

invest in what you do, long-term equipment

examples of financing cash flows

loans, dividends, stock

What are closing entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, ensuring that the temporary accounts are reset for the next period.

What balance do temporary accounts need to be closed to?

zero

Are balance sheet accounts closed?

No, balance sheet accounts are not closed; they carry their balances into the next accounting period.

Do you have to journalize and post closing entries?

Yes, you must journalize and post closing entries to properly update accounts and reset temporary account balances for the new accounting period.

What account do dividends close to?

the Retained Earnings account.

Are permanent accounts shown on the balance sheet?

Yes, permanent accounts are shown on the balance sheet, reflecting the company's ongoing financial position.

Are income accounts shown in income summary?

Yes, income accounts are summarized in the income summary account before closing entries are made.

what does the retained earnings account show?

The Retained Earnings account shows the cumulative amount of net income that has been retained in the company, rather than distributed to shareholders as dividends. It reflects the company's profitability and is a component of shareholders' equity on the balance sheet.

The statement of cahs flows shows changes in what account

the cash account