Chapter 2 notes
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An asset increases and a claims account
Asset source transaction
an asset decreases and a claims account
Asset use transaction
one asset increases and another asset decreases
Asset exchange transaction
one claim increases and another claim decreases
Claims exchange transaction
entry made at the end of the period to update the accounts
before preparing the financial statements . The entries do not affect cash.
is when cash is received or paid before revenue is earned or
an expense is incurred.
Business event and then Cash exchange
Cash exchange then Business event and
is a liability
account (example used in class was a magazine subscription) we would have to
provide magazines to subscribers.
Recognize the expense before the cash is paid
Cash will be paid at a later date
Example prepaid Rent or insurance ( Assets)
Record the entries as they occur in the general journal –
these are journal entries.
Entries are “posted” to the general ledger from the general
Prepare the trial balance—list of all of the accounts and
their balances .
Prepare the financial statements
Close the accounts with Journal entries
Temporary (income statement accounts )
Permanent (balance sheet accounts)
What would you like to do?
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