Beginning the Accounting Cycle – Flashcards

For each accounting period, the process that begins with the recording of business transactions or procedures into a journal and ends with the completion of a post-closing trial balance.

The period of time for which an income statement is prepared.

The 12-month period a business chooses for its accounting year. Alternatively known as a fiscal year and natural business year.

a fiscal year consists of 12 consecutive months ending on the last day of any month except December. For example, in terms of tax reporting, a fiscal year may run from Feb. 1 to Jan. 31. Alternatively, instead of observing a 12-month fiscal year, U.S. taxpayers may observe a 52- to 53-week fiscal year, where each year rotates between being 52 or 53 weeks long.

A natural business year is the period of 12 consecutive months (or 52-53 consecutive weeks) ending at a low point of an organization's activities. the end of the every year a company makes closing journal entries to close revenue and expense accounts to its retained earnings or capital accounts. That way the beginning of the next year it can start fresh with zero balances in all its income statement accounts.

Financial statements that are prepared for a month, quarter, or some other portion of the fiscal year.

A listing of business transactions in chronological order. The journal links on one page the debit and credit parts of transactions. Alternatively known as general journal.

The transaction (debit and credits) that is recorded into a journal once it is analyzed.

The process of recording a transaction entry into the journal.

Book that records the firs formal information about business transactions. ex: journal.

Book that receives information about business transactions from a book of original entry (a journal).ex: a ledger.

A journal entry that affects more than two accounts.

The transferring, copying, or recording of information from a journal to a ledger.

A running balance account that records debits and credits and has a column for an ending balance (debit or credit). It replaces the standard two-column account we used earlier.

Adding to the PR column of the journal the account number of the ledger account that was updated from the journal.

An informal listing of the ledger account and their balance in the ledger to aid in proving the equality of debits and credits.

The error that results in adding or deleting zeros in the writing of a number. Ex:79,200 to 7920.

The accidental rearrangement of digits of a number. Ex:152 to 125.