The Reporting Cycle Flashcards
The procedures needed to process transactions through an accounting system; including journalization, posting, adjusting, and preparing financial standards
accounting cycles
The process by which temporary accounts are “zeroed” out and the effects transferred to retained earnings
closing process
Assets that will be converted into cash or consumed within one year or the operating cycle, whichever is longer
current assets
Obligations that will be liquidated within one year or the operating cycle, whichever is longer
current liabilites
A measure of liquidity, calculated by dividing current assets by current liabilities
current ratio
All relevant facts that would influence investors’ and creditors’ judgments about the company are disclosed in the financial statements or related notes
full disclosure principle
A non-financial statement account used only to facilitate the closing process by summarizing and zeroing-out the revenue and expense accounts
income summary
Lack physical existence, and include items like purchased patents and copyrights
intangible asset
The ability of a firm to meet its near-term obligations as they come due
liquidity
Any obligation that is not current, and include bank loans, mortgage notes, and the like
long term liabilities
Accounts that will be reset to a zero balance with each new accounting period; revenue, expense, and dividend accounts (also called “temporary” accounts)
nominal accounts
The period of time it takes to convert cash back into cash (i.e., purchase inventory, sell the inventory on account, and collect the receivable)
operating cycle
Assets with long lives that will be used in an entity’s production processes; land, buildings, and equipment
property, plant, and equipment
Asset, liability, and equity accounts; balances are carried forward from the end of one period into the beginning of the next period
real accounts
The difference between current assets and current liabilities
working capital
