accounting cycle
recurring steps performed each accounting period, starting with analyzing transactions and continuing through the post-closing trial
... [Show More] balance (or reversing entries)
classified balance sheet
balance sheet that presents assets and liabilities in relevant subgroups, including current and noncurrent classifications
closing entries
entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, gain, expense, loss, and withdrawal (dividend for a corporation) accounts to the capital account (to retained earnings for a corporation)
closing process
necessary end-of-period steps to prepare the accounts for recording the transactions of the next period
current assests
cash and other assets expected to be sold, collected or used within one year or the company's operating cycle, whichever is longer
current liabilities
obligations due to be paid or settled within one year or the company's operating cycle, whichever is longer
current ratio
ratio used to evaluate a company's ability to pay its short-term obligations, calculated by dividing current assets by current liabilities
income summary
temporary account used only in the closing process to which the balances of revenue and expense accounts (including any gains or losses) are transferred; its balance is transferred to the capital account (or retained earnings of a corporation)
intangible assets
long-term assets (resources) used to produce or sell products or services; usually lack physical form and have uncertain benefits
long-term investments
long-term assets not used in operating activities such as notes receivable and investments in stocks and bonds
long-term liabilities
obligations not due to be paid within one year or the operating cycle, whichever is longer
operating cycle
normal time between paying cash for merchandise or employee services and receiving cash from customers
permanent accounts
accounts that reflect activities related to one or more future periods; balance sheet accounts whose balances are not closed; also called real accounts
post-closing trial balance
list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted
pro forma financial statements
statements that show the effects of proposed transactions and events as if they had occurred
reversing entries
optional entries recorded at the beginning of a period that prepare the accounts for the usual journal entries as if adjusting entries had not occurred in the prior period
temporary accounts
accounts used to record revenues, expenses, and withdrawals (dividends for a corporation); they are closed at the end of each period; also called nominal accounts
unclassified balance sheet
balance sheet that broadly groups assets, liabilities, and equity accounts
working papers
analyses and other informal reports prepared by accountants and managers when organizing information for formal reports and financial statements
work sheet
spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements [Show Less]