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a happening of consequence. an event gererally is the source or cause of changes in assets, liabilities,and equity. Events my be internal or external
An External Event involving a transfer or exchange between two or more entitites
A systematic arrangement that shows the effect of transactions and other events on a specific element( asset,liability, and so on) companies keep a seperate account for each asset, liability, revenue, and expense, and for capital (owners' Equity) because the format of an account often resembles the letter T, it is sometiems refereed to as a T-account
(permanant) are asset, liability, and equity accounts. they appear on the balance sheet. these accounts are not closed like nominal accounts
(temporary) accounts are revenue, expense, and dividend accouunts; except for dividends, they appear on the income statments. companies periodically close nominal accounts
The book (or Computer printouts) containing the accounts
is a collection of all the asset,liability,owners' equity, revenue, and expense accounts.
contains the details related to a given general ledger account.
The "Book of Original Entry" where the company initially records transactions and selected other events. various amounts are transferred from the book of original entry, the journal, to the ledger.
the actual entering of data into the journal. (Journal Entries)
the process of transferring the essential facts and figures from the book of original entry to the ledger acounts.
the list of all open accounts in the ledger and their balances. a company may prepare a trial balance at any time.
Adjusted trial balance
the trial balance taken immediatlely after all adjustments have been posted.
Post Closing Trial Balance
A trial balance taken immediatley after closing entries have been posted.
entries made at the end of an accounting period to bring all accounts up to date on the accrual basis, so that the company can prepare correct financial statments.
Statements that reflect the collection, tabulation and final summarization of accounting data
shows the financial condition of the enterprise at the end of a period
measures the results of operations during the period
The Statement of Cash Flows
reports the cash provided and used by operating, investing, and financing activities during a period
Statement of Retained Earnings
reconciles the balance of the retained earnings account from the beginnining to the end of the period.
The Formal Process by which the enterprise reduces all noniminal accounts to zero and determines and transfers the net income or net loss to an owners wquity account. also known as closing the ledger, closing the books, or mearly closing.
Basic accounting Equation
Assets= Liabilities + Stockholders Equity
Expanded accounting equation.
Assets = Liabilities +( Common Stock + retained earnings - Dividends + revenue - Expenses)
what are the nine steps in the accounting cycle
1. Journal Entry
2. Posting (to T-accounts)
3. Unadjusted Trial Balance
4. Prepare Adjustments
5. Adjusted Trial Balance
6. Prepare Financial Statments
7. Closing Entries
8. Post-closing trial Balance
9. revercing Enteries (optional)