Chapter 3

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Author:
tdelacruz
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159371
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Chapter 3
Updated:
2012-06-19 17:18:31
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Vocabulary and key concepts
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  1. Event
    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
  2. Transaction
    An External Event involving a transfer or exchange between two or more entitites
  3. Account
    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
  4. Real Account
    (permanant) are asset, liability, and equity accounts. they appear on the balance sheet. these accounts are not closed like nominal accounts
  5. Nominal Account
    (temporary) accounts are revenue, expense, and dividend accouunts; except for dividends, they appear on the income statments. companies periodically close nominal accounts
  6. Ledger
    The book (or Computer printouts) containing the accounts
  7. General ledger
    is a collection of all the asset,liability,owners' equity, revenue, and expense accounts.
  8. Subsidiary Ledger
    contains the details related to a given general ledger account.
  9. Journal
    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.
  10. Journalizing
    the actual entering of data into the journal. (Journal Entries)
  11. Posting
    the process of transferring the essential facts and figures from the book of original entry to the ledger acounts.
  12. Trial Balance
    the list of all open accounts in the ledger and their balances. a company may prepare a trial balance at any time.
  13. Adjusted trial balance
    the trial balance taken immediatlely after all adjustments have been posted.
  14. Post Closing Trial Balance
    A trial balance taken immediatley after closing entries have been posted.
  15. Adjusting Entries
    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.
  16. Financial Statements
    Statements that reflect the collection, tabulation and final summarization of accounting data
  17. Balance Sheet
    shows the financial condition of the enterprise at the end of a period
  18. Incomoe Statment
    measures the results of operations during the period
  19. The Statement of Cash Flows
    reports the cash provided and used by operating, investing, and financing activities during a period
  20. Statement of Retained Earnings
    reconciles the balance of the retained earnings account from the beginnining to the end of the period.
  21. Closing Entries
    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.
  22. Basic accounting Equation
    Assets= Liabilities + Stockholders Equity
  23. Expanded accounting equation.
    Assets = Liabilities +( Common Stock + retained earnings - Dividends + revenue - Expenses)
  24. 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)                

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