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2010-07-24 14:13:09
Accounting Exam

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  1. two-column general journal
    so named because it has only two amount columns, one for debit amounts & one for credit amounts
  2. Adjusting entries
    journal entries made at the end of an accounting period to reflect changes in account balances that are not the direct result of an exchange with an outside party.
  3. Book value
    the value carried on the books or in the accounting records.
  4. Chart of accounts
    a list of all account used by a business
  5. Closing entries
    are made at the end of the fiscal year.
  6. compound entry
    a general journal entry that affects more than two accounts
  7. depreciable cost
    the cost on asset that is subject to depreciation
  8. depreciation
    a method of mathching an asset's original cost against the revenues produced over it's useful life.
  9. double declining/declining balance depreciation
    a deprecition method that recognizes depreciation each year by multiplying a rate (typically double the straight-line rate) by the book value of the asset.
  10. fiscal year
    a 12-month period for which financial reports are prepared
  11. fixed assets
    property, plant, and equipment
  12. general ledger
    a complete set of all the accounts used by a business
  13. journal
    a day-by-day listing of the transactions of a business
  14. journalizing
    entering the transactions in a journal
  15. long-term liabilities/long-term debit
    are obligations that are not expected to be paid within a year and do not require the use of current assets.
  16. market value
    the amount an item can be sold for under normal economic conditions
  17. operating cycle
    the period of time required to purchase supplies and services and convert them back into cash.
  18. post closing trial balance
    after posting the closing entries, should be prepared to prove the equality of the debit & credit balances in the general ledger accounts.
  19. posting
    the process of copying the debits & credit from the journal to the ledger accounts
  20. prepaid expenses
    items which are considered to be assets when acquired, but which will become expenses when consumed
  21. scrap value
    (salvage value, residuel value) is the expected market value or selling price of the asset at the end of its useful life.
  22. source document
    the first record of a business transaction
  23. straight-line depreciation
    a depreciation method that reocgnizes an equal amount of depreciation each year.
  24. supplies
    used as an expense is incurred.
  25. correcting entry
    an entry to correct an incorrect entry that has been journalized and posted to the wrong account
  26. ruling method
    • should be used to correct two types of errors:
    • 1. when incorrect journal entry made, but not posted
    • 2. proper entry made but posted to the wrong account or wrong amount
  27. trial balance
    used to prove that the totals of the debit and credit balances in the T accounts were equal
  28. worksheet
    a form used to pull together all of the infomration needed to enter adjusting entries and prepare the financial statements.
  29. chart of accounts
    • 1 asset
    • 2 liability
    • 3 owner's equity
    • 4 expenses
  30. The Accounting Cycle steps:
    • step 1 analyze source documents
    • step 2 journalize the transactions
    • step 3 post to the general ledger accounts
    • END of Accounting Period
    • step 4 prepare a trial balance
    • step 5 determine and prepare the needed adjustments on the work sheet
    • step 6 complete an end of the period work sheet
    • step 7 journalize and post the adjusting entries
    • step 8 prepare an income statement, a statement of owner's equity and a balance sheet
    • step 9 journalize and post the closing entries
    • step 10 prepare a post-closing trial balance
  31. The Accounting Cycle
    steps involved in accounting for all of the business activities during an accounting period
  32. deprecitation methods:
    • straight-line method
    • sum-of-the year's digit depreciation
    • double-declining balance depreciation
  33. (MARCS) Modified Accelerated Cost Recovery System
    A depreciation method in which rates determined by the IRS are multiplied by the cost of the asset to determin depreciation expense fo the year.
  34. sum-of-the years digit
    if an asset has a five-year life, the sum-of-the years digit is computed as follows: 5+4+3+2+1=15
  35. sum-of-the-years digits depreciation method
    a depreciaton method that recognizes depreciation each year by multiplying a fraction by the depreciabe cost. The numerator of the fraction is the remaining life of the asset, measured from the beginning of the year. The denominator is the sum of the years digits.