Term
| What are the 10 Steps of the Accounting Cycle in order? |
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Definition
1. Analyze
2. Journalize
3. Post
4. Prepare unadjusted trial balance
5. Adjust
6. Prepare adjusted trial balance
7. Prepare financial statements
8. Close
9. Prepare Post-closing trial balance
10. (reverse) |
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Term
| What are the steps of the closing process? |
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Definition
1. Close revenue accounts to income summary.
a)Decrease revenue acct. balances to 0
b) transfer their balances to income summary (DR revenues, CR income summary)
2. Close expense accounts to income summary
a) Decrease expense account balance to 0.
b) Transfer their balances to income summary. (CR expenses, DR income summary)
3. Close income summary to capital
a) Determine balance of income summary
b)Decrease income summary balance to 0 (depends on if a net income or net loss is recorded)
c) Transfer it's balance to capital
4. Close withdrawals account to capital
a) decrease w/d balance to 0 (CR w/d)
b) Transfer it's balance to capital (DR capital) |
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Term
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Definition
short term asset account
-reports the total cost of merchandise purchased but not yet sold to customers.
-Costs included- all costs necessary to buy the merchandise, get to it to the seller, and get it ready for sale.
---purchase price, shipping costs (to gets gooods to us), taxes, storage fees, insurance on mdse, assembly fees, etc) |
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Term
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Definition
Revenue Account
-Reports total sales price of the merchandisethat has been sold (the original sales price)-(delivered to customer) |
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Term
| Sales returns and allowances |
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Definition
Contra Revenue acct
Reports 2 things:
1) Sales returns-sales price of mdse that customers return to the seller
2) Sales allowances- customer kept mdse, but mdse didn't meet their specifications so the seller reduced the original sales price. THe allowance is the amount of that reduction |
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Term
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Definition
Contra Revenue Account
-Cash discount offered by the seller to a customer for early payment of an account |
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Term
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Definition
Expense Account
-Reports total cost of merchandise that has been sold to customers |
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Term
| What does a buyer refer to a cash discount as? Seller? |
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Definition
Buyer: refers to a cash discount as a "purchase discount"
-Buyer pays accounts payable early and receives a reduced price
-reduces inventory account
-not accounted for until the date of payment
Seller: refers to a cash discount as a "sales discount"
-When customer pays accounts receiveable early the cash discount will be recognized.
-Increases sales discount account
-Not accounted for until the date of payment |
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Term
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Definition
FOB- Free on Board
FOB Shipping Point- shipping point refers to the seller (the person initiating the sale)
-- Buyer is owner of goods during shipping, buyer must pay those shipping costs
FOB Destination: destination refers to the Buyer
-- Seller is the owner of the goods during shipping, so the seller must pay the shipping costs |
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Term
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Definition
| Specifically identifies the exact $ value of the item the consumer is purchasing |
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Term
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Definition
| assuming that the merchandise sold is the oldest merchandise available for sale |
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Term
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Definition
| assumes that the merchandise sold first is the newest merchandise available for sale in the inventory account |
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Term
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Definition
| Rather than assigning a specific dollar value that was actually paid, it assignes an average of all the items available for sale |
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Term
| Equations for finding cost of goods available for sale and cost of goods sold |
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Definition
Beginning Inventory+Purchases= COGAFS
COGAFS= Ending Inventory+ COGS
Beginning Inventory+ Purchases= Ending Inventory + COGS |
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