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Cash Basis of Accounting
Records revenues when cash is recieved and reords expenses when cash is paid.
Accrual Basis of Accounting
Records revenues when they are earned and records expenses when they are incurred.
Adjusting Journal Entries
Entries made in the general journal to record revenues that have been earned but not recorded and expenses that have been incurred but not recorded.
The process of transferring all revenue, expense, and dividend account balances to the Retained Earnings account.
Accounts that accumulate balances only for the current period.
Entries made in the journal and posted to the ledger that eliminate the balances in all temporary accounts and transfer those balances to the Retained Earnings account
The sequence of steps in which an accounting information system captures, processes, and reports a company's accounting transactions during a period.
List the steps of the Accounting Cycle
- 1. Journalize and post accounting transactions.
- 2. Prepare a trial balance.
- 3. Journalize and post adjusting entries.
- 4. Prepare an adjusted trial balance.
- 5. Prepare financial statements.
- 6. Journalize and post closing entries.
- 7. Prepare a post-closing trial balance.