Study Guide 6 – Part One – Identifying Accounting Terms – Flashcards
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accrual basis of accounting
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reporting income when it is earned and expenses when they are incurred (p. 163)
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adjusting entries
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Journal entries recorded to update general ledger accounts at the end of a fiscal period (p. 176)
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adjustments
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changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period (p. 163)
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balance sheet
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a financial statement that reports assets, liabilities, and owner's equity on a specific date (p. 169)
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cash basis of accounting
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reporting income when the cash is received and expenses when the cash is paid (p. 163)
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fiscal period
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the length of time for which a business summarizes its financial information and reports its financial performance (p. 159)
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fiscal year
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a fiscal period consisting of 12 consecutive months (p.159)
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income statement
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a financial statement showing the revenue and expenses for a fiscal period (p. 170)
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net income
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the difference between total revenue and total expenses when total revenue is greater (p.171)
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net loss
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the difference between total revenue and total expenses when total expenses are greater (p. 172)
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prepaid expense
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cash paid for an expense in one fiscal period that is not used until a later period (p.163)
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trial balance
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a proof of equality of debits and credits in a general ledger (p.160)
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work sheet
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a columnar accounting form used to summarize the general ledger information needed to prepare financial statements (p.159)
