Term
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Definition
1) every transaction maintains equality of account equation (A=L+E)
2) For every transaction debits need to equal credits |
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Term
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Definition
| Basic summary used to record increases and decreases in some element of a financial statement |
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Term
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Definition
| Notebook of file that contains all accounts of a firm |
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Term
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Definition
| A means of recording the transactions of a firm chronologically in terms of debits and credits. |
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Term
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Definition
| A listing of all the accounts in the general ledger. Indicates only if an account is balanced. |
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Term
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Definition
| Process of transferring the information from the general journal to the individual accounts of the general ledger. |
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Term
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Definition
| At the end of an accounting period, adjusting entries record the transactions which are in process or have been completed but not yet recorded. These entries are necessary in order to record revenues when they are earned and expenses when they are incurred. , and not necessarily when cash is received or paid. |
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Term
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Definition
| To close or transfer the balances in the temporary accounts into the retained earnings account. |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| The cost of the inventory sold during the period. Beginning inventory plus purchases minus the ending inventory equals the cost of goods sold. |
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Term
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Definition
| Goods on hand and available for sale at the beginning of the period. |
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Term
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Definition
| Goods still on hand and available for sale at the end of the period. |
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Term
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Definition
| The shipping costs incurred for goods purchased |
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Term
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Definition
| Beginning inventory plus purchases. |
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Term
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Definition
| "First In, First Out) Inventory method that assumes that the costs of the first items acquired or produced are the costs of the first items used or sold. |
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Term
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Definition
| "Last in, First out" Inventory method that assumes that the cost of the last items acquired or produced are the costs of the first items used or sold. |
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Term
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Definition
| Estimates the cost of the ending inventory by assuming that the relationship among sales, cost of goods sold and gross profit remains constant. |
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Term
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Definition
| All inventory acquired during a period. |
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Term
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Definition
| Inventory estimation method that assumes that the cost of merchandise on hand at any time bears the same relationship to total retail prices as the total cost of all goods handled during the period bears to the original selling prices. |
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Term
| Weighted Average Inventory Method |
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Definition
| Based on the theory that one unit cannot be distinguished from another. The average cost is computed by dividing the total cost of the beginning inventory plus purchases by the total number of units. |
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Term
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Definition
| Maintain records of the exact cost of each item and each item on hand. |
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Term
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Definition
| Spread asset cost over periods that benefit. |
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Term
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Definition
| A contra asset related to a long term asset that shows the total amount of the asset depreciated to date. |
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Term
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Definition
1) Analyze transactions
2) Prepare journal entries and post to ledger arrounct
3) Prepare trial balance
4) Prepare adjusting entries, record in journal and post to ledger
5) Prepare adjusted trial balance
6) Prepare financial statements
7) Prepare closing entries and post to ledger
8) Prepare post-closing trial balance |
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Term
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Definition
| Assets, Liabilities and Equity |
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Term
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Definition
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Term
| Statement of Stockholder's Equity |
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Definition
| Retained earnings, dividends and net income. |
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Term
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Definition
| Sales - (Discounts + R/A) |
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Term
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Definition
| Purchases - (Returns + Disc.) + Freight In |
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Term
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Definition
Net Sales - Cost of Goods Sold
Net Income + Expenses |
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Term
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Definition
| Assigns the most recent costs to inventories included on the balance sheet. Good to use when inventory turnover is rapid or when the composition of the inventory changes frequently. |
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Term
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Definition
| Fails to match the most recent costs with the current revenues. Could result in an overstatement of income. |
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Term
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Definition
| Matches current costs more nearly with current revenues. Income computed is less which reduces income taxes. |
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Term
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Definition
| Reported and taxable income are reduced. It gives "noncurrent" value to inventories in the balance sheet. |
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