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13 terms

Chapter 4 Terms

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Accounting Cycle
the process followed by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle.
Accrued Expenses
previously unrecorded expenses that need to be adjusted at the end of the accounting period to reflect the amount incurred and the related payable account
Accrued Revenues
previously unrecorded revenues that need to be adjusted at the end of the accounting period to reflect the amount earned and the related receivable account
Adjusting Entries
Journal entries necessary at the end of the accounting period to measure all revenues and expenses of that period
Closing Entry
transfers balances in temporary accounts to Retained Earnings and establishes zero balances in temporary accounts
Contra-Account
account that is offset to, or reduction of, the primary account
Deffered Expenses
previously acquaired assets that need to be adjusted at the end of the accounting period to reflect the amount of expense incurred in using the asset to generate revenue
Deffered (unearned) Revenues
previously recorded liabilities that need to be adjusted at the end of the accounting period to reflect the amount of revenue earned
Net Book Value
of an asset is the difference between its acquisition cost and accumulated depreciation, its related contra-account
Permanent Accounts
Balance sheet accounts whose balances are carried forward to the next accounting period
Post Closing Trial Balance
should be prepared as the last step of the accounting cycle to check that debits equal credits and all temporary accounts have been closed
Temporary Accounts
income statement accounts that are closed to retained earnings at the end of the accounting period
Trial Balance
a list of all accounts with their balances to provide a check on the equality of the debits and credits