Chapter 2 notes

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Author:
Jcritorto
ID:
101996
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Chapter 2 notes
Updated:
2011-09-15 20:05:46
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  1. An asset increases and a claims account
    increases
    Asset source transaction
  2. an asset decreases and a claims account
    decreases
    Asset use transaction
  3. one asset increases and another asset decreases
    Asset exchange transaction
  4. 1.
    one claim increases and another claim decreases
    Claims exchange transaction
  5. entry made at the end of the period to update the accounts
    before preparing the financial statements . The entries do not affect cash.
    Adjusting entry
  6. is when cash is received or paid before revenue is earned or
    an expense is incurred.
    Deferral
  7. Business event and then Cash exchange
    Accruals
  8. Cash exchange then Business event and
    Deferrals
  9. is a liability
    account (example used in class was a magazine subscription) we would have to
    provide magazines to subscribers.
    Unearned revenue
  10. ·
    Recognize the expense before the cash is paid

    ·
    Cash will be paid at a later date

    Example prepaid Rent or insurance ( Assets)
    Accrued expenses
  11. STEP 1

    Record the entries as they occur in the general journal –
    these are journal entries.



    Step 2

    Entries are “posted” to the general ledger from the general
    jounal

    T-Accounts



    Step 3

    Prepare Adjusting
    entries---



    Step 4

    Prepare the trial balance—list of all of the accounts and
    their balances .


    Step 5



    Prepare the financial statements

    Step 6

    Close the accounts with Journal entries

    Temporary (income statement accounts )

    Permanent (balance sheet accounts)
    Accounting Cycle

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