Accounting Exam 2

Front 1

Journalizing

Back 1

Process of recording a biz transaction is always recorded first in the journal.

Front 2

Account numbers

Back 2

Numbers assigned to accounts according to chart of accounts.

Front 3

Cost principle

Back 3

Principle that a purchased asset should be recorded at its actual cost.

Front 4

General ledger

Back 4

Book or file containing the activity, either manual or computerized, of a biz.

Front 5

Journal

Back 5

Book in which a person makes original record of a biz transaction" commonly refered to as a book of original entry.

Front 6

Ledger account

Back 6

Complete record of transactions recorded in a individual account.

Front 7

Posting

Back 7

Process of transferring figures from journal to ledger accounts.

Front 8

Source Documents

Back 8

Biz papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place.

Front 9

Two-column General Journal

Back 9

General journal in which there are two amount columns, one used for debit amount and one used for credit amounts.

Front 10

Accounting cycle

Back 10

Sequence of steps in accounting process completed during fiscal period.

Front 11

Accrual

Back 11

Recognition of an expense or a revenue that has been incurred or earned but has not yet been recorded.

Front 12

Accrued wages

Back 12

Unpaid wages owed to employees for time between end of last pay period and the end of fiscal period.

Front 13

Adjusting entries

Back 13

Entries that bring the books up to date at the end of the fiscal period.

Front 14

Adjustments

Back 14

Internal transactions that bring ledger accounts up to date, as a planned part of the accounting procedure. They are first recorded in the adjustments columns of the work sheet when using a manual accounting system.

Front 15

Book value

Back 15

Cost of an asset minus the accumulated system.

Front 16

Contra asset

Back 16

Account that is contrary to, or a deduction from, another account; for example, accumulated depreciation, equipment is listed as a deduction from equipment.

Front 17

Depreciation

Back 17

Expense based on the expectation that an asset will gradually decline in usefulness due to time, wear and tear or obsolescence; cost of the asset is therefore spread out over its estimates useful life.

Front 18

Fiscal period

Back 18

Any period of time covering a complete accounting cycle, generally consisting of twelve consecutive months.

Front 19

Fiscal Year

Back 19

A fiscal period consisting of twelve consecutive months.

Front 20

Matching principle

Back 20

Principle that revenue for one time period is matched up with related expenses for same time period.

Front 21

Mixed Accounts

Back 21

Certain accounts that appear on trial balance with balances that are partly income statements amounts and partly balance sheet amounts
example-prepaid insurance and insurance expense.

Front 22

Straight-line Depreciation

Back 22

Means of calculating depreciation in which cost of an asset, less any trade-in value, is allocated evenly over useful life of asset.

Front 23

Work sheet

Back 23

Working paper used by accountants to record necessary adjustments and provide up-to-date account balances needed to prepaid the financial statements.

Front 24

Accrual basis of accounting

Back 24

Accounting method under which revenue is recorded when it is earned, regardless of when it is received, and expenses are recorded when they are incurred, regardless of when they are paid.

Front 25

Cash basis of accounting

Back 25

Accounting method under which revenue is recorded only when it is received in cash.
Most expenses are recorded only when they are paid in cash.

Front 26

Closing entries

Back 26

Entries made at the end of a fiscal period to close off the revenue, expense, and drawing accounts-that is, to make the balances of the temporary-equity accounts equal to zero. Closing is also called clearing the accounts.

Front 27

Income Summary account

Back 27

Account brought into existence in order to have a debit and credit in each closing entry.
The revenue and expense account balances are transferred to this account to allow calculations of net income or net loss.

Front 28

Interim Statements

Back 28

Financial statements prepared during the fiscal year, covering a period of time of less than 12 months.

Front 29

Nominal accounts

Back 29

Accounts that apply to only one fiscal period and that are to be closed at the end of the fiscal period, such as revenue, expense, income summary, and drawing accounts.
This category may also be described as all accounts except assets, liabilities, and the Capital account.

Front 30

Post-closing trial balance

Back 30

The listing of the final balances of the real accounts at the end of the fiscal period.

Front 31

Real Accounts

Back 31

AKA permanent.
Accounts that remain open and that have balances that will be carried over to the next fiscal period....
Assets
liabilities
capital accounts in owners equits

Front 32

Simple interest Calculation

Back 32

INTEREST = PRINCIPAL X RATE X TIME

Front 33

“Banker’s Method”

Back 33

computes interest on presumption that there are 360 days in a year.

Front 34

“Maturity Date”

Back 34

term of note starts from date stated in note until date payment is due.

Front 35

Notes Receivable

Back 35

When a client gives the business a Note promising to make payment in the future.
asset account

Front 36

Interest income

Back 36

income account and will be reported on the Income Statement.

Front 37

Notes Payable

Back 37

entry when business creates Note promising to pay another party.
liability

Front 38

“Interest Expense”.

Back 38

recording...maturity date, principal and the interest is paid Note Payable will be reduced by amount of principal and interest.

Front 39

Simple interest Calculation

Back 39

INTEREST = PRINCIPAL X RATE X TIME

Front 40

“Banker’s Method”

Back 40

computes interest on presumption that there are 360 days in a year.

Front 41

“Maturity Date”

Back 41

term of note starts from date stated in note until date payment is due.

Front 42

Notes Receivable

Back 42

When a client gives the business a Note promising to make payment in the future.
asset account

Front 43

Interest income

Back 43

income account and will be reported on the Income Statement.

Front 44

Notes Payable

Back 44

entry when business creates Note promising to pay another party.
liability

Front 45

“Interest Expense”.

Back 45

recording...maturity date, principal and the interest is paid Note Payable will be reduced by amount of principal and interest.