Century 21 Accounting Chapter 22

Terms in this set (24)

The unadjusted trial balance and other financial data are used to plan and record adjustments.

Financial statements are prepared using an adjusted trial balance.

All accounts that need to be brought up to date are adjusted before financial statements are prepared.

To bring Supplies account up to date, the balance of supplies needs to be decreased by the cost of supplies used during the year.

The tax rate for federal income tax varies depending on the amount of net income earned.

After all adjusting entries are journalized and posted, an adjusted trial balance is prepared.

Gains and losses from the sale of plant assets are listed after income from operations on the income statement

On an income statement, the difference between other revenues and other expenses is reported as a net addition or net deduction

If a company has issued both common and preferred stock, its statement of stockholders' equity will contain only two major sections: capital stock and retained earnings.

Bonds Payable is an example of a long-term liability account

The statement of cash flows is prepared on a cash basis rather than an accrual basis

The purchase of office equipment for cash would be listed as a financing activity on the statement of cash flows.

The payment of interest would be listed as a cash outflow in the operating activities section on the statement of cash flows.

The sale of office equipment would be listed as a cash inflow in the operating activities section on the statement of cashflows

The payment of cash dividends would be listed as an investing activity on the statement of cashflows.

Closing entries for a corporation are made from information in an adjusted trial balance.

A reversing entry is desirable if an adjusting entry creates a balance in an asset or a liability account.

The cash receipts and cash payments of a company.

Statement of cash flows

A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a fiscal period.

Operating activities

The cash receipts and payments necessary to operate a business on a day-to-day basis.

Investing activities

Cash receipts and cash payments involving the sale or purchase of assets used to earn revenue over a period of time.

Financing Activities

cash receipts and payments involving debt or equity transactions

Working Capital

current assets - current liabilities

current assets divided by current liabilities

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