19 terms

Accounting Chapter 8

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adjusting entries
journal entries recorded to update general ledger accounts at the end of a fiscal period
Accounting Period Cycle
Preparing financial statements at the end of each monthly fiscal period is an application of this accounting concept.
Adequate Disclosure
Financial statements contain all information necessary to understand a business's financial condition
Matching Expenses with Revenue
Revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period
update the general ledger accounts
Why are adjusting entries journalized?
work sheet
Where is information obtained to journalize adjusting entries
permanent accounts
Accounts used to accumulate information from one fiscal period to the next
Real Account
Another name for a permanent account
temporary accounts
accounts used to accumulate information until it is transferred to the owner's capital account
Nominal Account
Another name for temporary account
Closing entries
journal entries used to prepare temporary accounts for a new fiscal period
Starting Balances
What do the ending balances of permanent accounts for one fiscal period represent at the beginning of the next fiscal period?
Changes in the owner's capital over a single fiscal period
What do the balances of temporary accounts show?
Income Statement Credit (SALES), Income Statement Debit (EXPENSES), Net Income/Net Loss, and Owner's Drawing
List the four closing entries
Post-closing trial balance
a trial balance prepared after the closing entries are posted
accounting cycle
The series of accounting activities included in recording financial information for a fiscal period
assures the reader that a balance has not been omitted
Why are lines drawn in both the Balance Debit and Balance Credit columns when an account has a zero balance?
Assets, Liabilities, and Owner's Capital
Which accounts go on the post-closing trial balance?
Temporary accounts are closed and have zero balances
Why are temporary accounts omitted from a post-closing trial balance?