Accounting

Question 1

How do you calculate what goes into debits for closing accounts?

Answer 1

all expenses make up the total debits, add together & transfer over total expenses to the debit side of the Income Summary

Question 2

Accounting Cycle

Answer 2

steps in preparing financial statements:

1. analyze transactions
2. journalize
3. post
4. prepare unadjusted trial balance
5. adjust
6. prepare adjusted trial balance
7. prepare statements
8. close
9. prepare post-closing trial balance
10. reverse

Question 3

Classified Balance Sheet

Answer 3

organizes assets and liabilities into important subgroups that provide more info to decision makers

Question 4

Closing entries

Answer 4

transfer the end-of-period balances in revenue, expense, and withdrawals accounts to the permanent capital account

Question 5

Closing process

Answer 5

end of the accounting period after financial statements have been completed. It prepares accounts for recording the transactions and events of the next period. In the closing process we must: identify accounts for closing, record and post the closing entries, and prepare a post-closing trial balance

Question 6

Current assets

Answer 6

cash and other resources that are expected to be sold, collected, or used within one year or the company’s operating cycle, whichever is longer

Question 7

Current liabilities

Answer 7

obligations due to be paid or settled within one year or the operating cycle, whichever is longer

Question 8

Current ratio

Answer 8

one measure of the company’s ability to pay its short-term obligations
current ratio = current assets/ current liabilities

Question 9

Income Summary

Answer 9

temporary account (only used for the closing process) that contains a credit for the sum of all revenues (and gains) and a debit for the sum of all expenses (and losses)

Question 10

Intangible assets

Answer 10

long-term resources that benefit business operations, usually lack physical form, and have uncertain benefits

Question 11

Long-term investments

Answer 11

expected to be held for more than the longer of one year of the operating cycle

Question 12

Long-term liabilities

Answer 12

obligations not due within one year or the operating cycle, whichever is longer

Question 13

Operating Cycle

Answer 13

the time span from when case is used to acquire goods and services until cash is received from the sale of goods and services

Question 14

Permanent Accounts

Answer 14

report on activities related to one or more future accounting periods. They carry their ending balances into the next period and generally consist of all balance sheet accounts. These asset, liability, and equity accounts are not closed

Question 15

Post-closing trial balance

Answer 15

list of permanent accounts and their balances from the ledger after all closing entries have been journalized and posted

Question 16

Pro-forma financial statements

Answer 16

show the statements as if the proposed transactions occurred

Question 17

Reversing entries

Answer 17

optional; recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of a reporting period

Question 18

Temporary accounts

Answer 18

accumulate data released to one accounting period. They include all income statement accounts, the withdrawals account, and the Income Summary account

Question 19

Unclassified balance sheet

Answer 19

items are broadly grouped into assets, liabilities, and equity

Question 20

Working papers

Answer 20

internal documents; informal reports

Question 21

Work sheet

Answer 21

spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements