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- Explain the sequence of financial transactions that occur continuously during an accounting time period. What is this sequence of activities called?
- Do you have to wait until the operating cycle is complete before you can measure income using the accrual basis of accounting?
- What is the relationship between the matching concept and accrual accounting? Are revenues matched to expenses, or are expenses matched to revenues? Does it matter one way or the other?
- What are adjusting entries and why are they required?
- What are the five types of adjusting entries?
- Why are asset accounts like Prepaid Insurance adjusted? How are they adjusted?
- How are long-lived asset accounts adjusted? Is the procedure similar to the adjustment of other asset and liability accounts at the end of an accounting period?
- What is a contra account and why is it used?
- How are liability accounts like Unearned Repair Revenue adjusted?
- Explain the terms accrued revenues and accrued expenses. Give examples of each.
- Why is an adjusted trial balance prepared?
- How is the adjusted trial balance used to prepare financial statements?
- List the eight steps in the accounting cycle.
- Which steps in the accounting cycle occur continuously throughout the accounting period?
- Which steps in the accounting cycle occur at the end of the fiscal year? Explain how they differ from the other steps.
- In general, income statement accounts accumulate amounts for a time period not exceeding one year. Why is this done?
- Identify which types of general ledger accounts are temporary and which are permanent.
- What is the Income Summary account and what is its purpose?
- What are the four types of closing entries, and why are they journalized?
- Why is the Dividends account not closed to the Income Summary account when closing entries are prepared?
- What is a post-closing trial balance and why is it prepared?
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