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29 Cards in this Set
- Front
- Back
Internal documents are called
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working papers
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5 steps in preparing worksheet
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1 Enter unadjusted trial bal
2 Enter adjustments 3 Prepare adjusted trial bal 4 Sort adj trial bal to fin state 5 Total statement columns, compute income or loss and balance columns |
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Adjusted Trial Balance Amounts to Income Statement
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Income Statement
Exp - Debit column Revenue - Credit column |
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Adjusted Trial Balance Amounts to Balance Sheet & Statement of Owners Equity
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Assets & Withdrawls - Debit
Liabilities & Owner Cap - Credit column |
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Income Statement -
net income or net loss |
Credit totals exceed Debit = net income
Debit totals exceed Credit = net loss |
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Net income added to Credit column
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Add to Owner's Capital
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Net loss added to the Debit column
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Subtract from Owner's Capital
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Temporary Accounts
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Revenue
Expenses Owner's Withdrawls Income Summary |
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Permanent Accounts
carry ending balances into next period all Balance Sheet Accounts |
Assets
Libabilities Owner Capital |
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Revenue, Expense, and Withdrawl accounts must begin each period with___ balances
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Zero
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Owner's capital must reflect prior periods' ____, _____, ____
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Revenues,
Expenses Withdrawls |
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To close temporary accounts, we transfer balances to what account
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Income Summary
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Income Summary
def |
Temporary account that contains a credit for the sum of all revenues and a debit for the sum of all expenses
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4 Step Closing Process
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1 Close revenue accounts
2 Close expense accounts 3 Close income summary acct 4 Close withdrawls account |
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Post-closing trial balance
def |
List of permanent accounts and their balances from the ledger after all closing entries have been journalized and posted
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Unclassified Balance Sheet
def |
Items are broadly grouped into assest, liabilities, and equity
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Classified Balance Sheet
def |
Organizes assets and liabilities into important subgroups that provide more information to decision makers
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Operating Cycle
def |
Time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services
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Current assets & current liabilitiest - how listed
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Listed in order of how quickly they will be converted to, or paid in cash
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Current Assets
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Cash or resources expected to be sold, collected, or used within 1 yr
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Current Assets
examples |
Cash
Short-term investments Accounts Receivable Short-term notes receivable goods for sale |
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Prepaid Expenses
examples Not converted to cash |
Prepaid Insurance
Prepaid Rent Office Supplies Store Supplies |
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Long-Term Investments
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Notes receivable and investments in stocks and bonds
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Plant Assets
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Tangible that are long-lived and used to produce or sell products and services
Equipment, machinery, buildings, land used to produce |
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Intangible Assets
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Long-term resources that benefit business operations
Patents, tradmarkes, copyrights, franchises, and goodwill |
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Current Liabilities
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Obligations due to be paid or settled within 1 yr
Accounts payable, Notes payable, wages payable, taxes payable, interest payable, & unearned revenues |
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Long-Term Liabilities
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Obligations not due within 1 yr
Notes payable, mortgages payable, bonds payable, and lease obligations |
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Equity
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Owner's claim on assets
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Current Ratio
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Current Ration =
Current assets/Current Liab |