15 terms

Accounting General Journal, 9E: Chapter 08

Recording Adjusting and Closing Entries for a Service Business
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Terms in this set (...)

adjusting entries
journal entries recorded to update general ledger accounts at the end of a fiscal period
permanent accounts
accounts used to accumulate information from one fiscal period to the next
temporary accounts
accounts used to accumulate information until it is transferred to the owner's capital account
closing entries
journal entries used to prepare temporary accounts for a new fiscal period
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
Why are adjusting entries journalized?
To update general ledger accounts at the end of a fiscal period.
Where is the information obtained to journalize adjusting entries?
Adjustments column of the work sheet.
What accounts are increased from zero balances after adjusting entries for supplies and prepaid insurance are journalized and posted?
Supplies Expense and Insurance Expense.
What do the ending balances of permanent accounts for one fiscal period represent at the beginning of the next fiscal period?
Beginning balances.
What do the balances of temporary account show?
Changes in the owner's capital for a single fiscal period.
List the four closing entries.
a. An entry to close income statement accounts with credit balances.
b. An entry to close income statement accounts with debit balances.
c. An entry to record net income or net loss and close the income summary account.
d. An entry to close the owner's drawing account.
Why are lines drawn in both the Balance Debit and Balance Credit columns when an account has a zero balance?
To assure a reader that a balance has not been omitted.
Which accounts go on the post-closing trial balance?
Only those with balances (permanent accounts).
Why are temporary accounts omitted from a post-closing trial balance?
Because they are closed and have zero balances.