Completing the Accounting Cycle

A series of vocabulary flashcards focused on key concepts from Chapter 4 of the accounting cycle, aimed at enhancing understanding of financial statements and the accounting process.

Work Sheet

A tool used to organize information for preparing adjusting entries, financial statements, and closing entries.

Classified Balance Sheet

A financial statement that groups assets, liabilities, and equity into current and noncurrent categories.

Temporary Accounts

Accounts that are closed at the end of an accounting period, such as revenue and expense accounts.

Permanent Accounts

Accounts that carry balances over multiple accounting periods, such as asset, liability, and equity accounts.

Closing Entries

Journal entries made at the end of an accounting period to reset the balances of temporary accounts to zero.

Post-Closing Trial Balance

A list of permanent accounts and their balances after closing entries have been posted.

Current Assets

Assets expected to be converted to cash or used up within one year or the company’s operating cycle.

Long-Term Investments

Investments expected to be held for more than one year or one operating cycle.

Plant Assets

Tangible long-lived assets used in the operation of a business, such as equipment and buildings.

Intangible Assets

Non-physical long-term assets that provide operational benefits, such as patents and trademarks.

Current Liabilities

Obligations that are due to be paid within one year or the company's operating cycle.

Long-Term Liabilities

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

Equity

The owner's residual interest in the assets of a business after deducting liabilities.

Adjusted Trial Balance

A trial balance that includes all adjustments made during the accounting period.

Income Summary

An account used during the closing process to accumulate revenue and expenses before closing to capital.