Reversed Chapter (4) Flashcards Preview

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Flashcards in Reversed Chapter (4) Deck (19)
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1
Q

The process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance.

A

accounting cycle

2
Q

Another name for the income summary account because it has the effect of clearing the revenue and expense accounts of their balances.

A

account form

3
Q

The entries that transfer the balances of the revenue; expense; and drawing accounts to the owner’s capital account.

A

closing entries

4
Q

The transfer process of converting temporary account balances to zero by transferring the revenue and expense account balances to Income Summary; transferring the income summary account balance to the owner’s capital account; and transferring the owner’s drawing account to the owner’s capital account.

A

closing process

5
Q

The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period.

A

closing the books

6
Q

Cash and other assets that are expected to be converted to cash or sold or used up; usually within one year or less; through the normal operations of the business.

A

current assets

7
Q

Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets.

A

current liabilities

8
Q

A financial ratio that is computed by dividing current assets by current liabilities.

A

current ratio

9
Q

The annual accounting period adopted by a business.

A

fiscal year

10
Q

The number of dollars of sales that are generated from each dollar of average fixed assets during the year; computed by dividing the net sales by the average net fixed assets.

A

fixed assets

11
Q

An account to which the revenue and expense account balances are transferred at the end of a period.

A

Income Summary

12
Q

The ability to convert assets into cash.

A

liquidity

13
Q

Liabilities that usually will not be due for more than one year.

A

long-term liabilities

14
Q

A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.

A

natural business year

15
Q

A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.

A

notes receivable

16
Q

Term for balance sheet accounts because they are relatively permanent and carried forward from year to year.

A

real accounts

17
Q

The ability of a firm to pay its debts as they come due.

A

solvency

18
Q

Accounts that report amounts for only one period.

A

temporary accounts

19
Q

The excess of the current assets of a business over its current liabilities.

A

working capital