a happening of consequences
event - may be internal or external
an external event involving a transfer or exchange between 2 or more entities
transaction
a systematic arrangement that shows the effect of transactions and other events on a specific element
account
source or cause of changes in assets, liabilities, and equity
event
_____ accounts are asset, liability, and equity accounts
real (permanent) accounts
what accounts appear on the balance sheet?
real/permanent accounts
______ accounts are revenue, expense, and dividend accounts
nominal (temporary accounts)
nominal and temporary accounts appear on what statement?
income statement except dividends
the book containing the accounts
ledger
collection of all the asset, liability, owners' equity, revenue, and expense accounts
general ledger
contains the details related to a given ledger account
subsidiary ledger
the process of transferring the essential facts and figures from the book of original entry to the ledger accounts
posting
the list of all open accounts in the ledger and their balances
trial balance
a trial balance taken immediately after closing entries have been posted is called what?
post - closing trial balance
entries made at the end of an accounting period to bring all accounts up to date on an accrual basis, so that the company can prepare correct financial statements
adjusting entries
the formal process by which the enterprise reduces all nominal accounts to zero and determines and transfers net income to owners' equity account
closing entries
the number in the "ref" column of the general journal refers to what?
the ledger accounts to which a company posts the respective items
if companies don't make adjustments for deferred revenue and expenses, what is overstated?
asset and liability are overstated
the asset's book value generally differs from its market value because ...?
depreciation is not a matter of valuation but rather a means of cost allocation
how do you close net income to retained earnings?
Dr. Income Summay
Cr. Retained Earnings
how do you close dividends to retained earnings?
Dr. Retained Earnings
Cr. Dividends