Accounting 1 Final Cengage

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

Closing Entries

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

adjusting entries

A financial statement showing the revenue and expenses for a fiscal period.

income statement

An accounting device used to analyze transactions.

T Account

Reporting income when earned and expenses when incurred.

Accrual Basis of Accounting

Accounts used to accumulate information from one fiscal period to the next.

permanent accounts

A list of accounts used by a business.

chart of accounts

The cost of goods or services used to operate a business.

expense

A person or business to whom a liability is owed.

accounts payable

A proof of the equality of debits and credits in a general ledger.

balance sheet

Accounts used to accumulate information until it is transferred to the owner's capital account.

temporary accounts

A planned process designed to compile financial data and summarize the results in accounting records and reports.

accounting system

Transferring information from a journal entry to a ledger account.

posting

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

income statement

An increase in equity resulting from the sale of goods or services.

revenue

T/F

The drawing account is a permanent account.

False

T/F

A transaction for the sale of goods or services results in a decrease in owner's equity.

False

T/F

If the previous account balance and the current entry posted to an account are both credits, the new account balance is a credit.

True

T/F

Adjusting entries must be posted to the general ledger accounts.

True

T/F

Temporary accounts are used to accumulate information until it is transferred to the owner's capital account.

True

T/F

A balance sheet reports financial information for a period of time.

False

T/F

A transaction recorded in a journal is not considered a permanent record.

False

T/F

The formula for calculating net income is total revenue minus total expenses.

True

T/F

The source document for an electronic funds transfer is a memorandum.

True

On a work sheet, the balance of the owner's drawing account is extended to the

Balance Sheet Debit column.

The entry to establish a $200.00 petty cash fund is

debit Petty Cash, $200.00; credit Cash,

When cash is paid for insurance

Prepaid insurance is increased

Information needed to prepare an income statement's revenue section is obtained from a work sheet's account title column and

income statement credit column

Reporting changes in financial information for a specific period of time in the form of financial statements is an application of the accounting concept

Accounting Period Cycle

Income summary is a

temporary account

The first digit in the account number 410 means the account is in the

revenue division of the ledger

The first step in the posting procedure is writing the

Enrty date in the date column of the account

The journal entry to close income summary when there is a net income is

debit income summary; credit sales

If an amount is recorded on the side of a t account opposite the normal balance side, the account balance is

decreased

asset accounts include cash, prepaid insurance, and

accounts receivable

the formula for calculating net income ratio is

net income divided by total sales

If an error is recorded in a journal entry,

all of these

the normal balance side of any expense account is

debit side

assests taken out of a business for the personal use of the owner are called

withdrawals