exam review #2.docx - Chapter 4 1 2 3 4 5 6 7 Adjusted...

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Chapter 4. 1. Adjusted trial balance: 2. Operating cycle: the times spams during which cash is paid for goods and services which are then sold to customer’s form whom the business collects cash. - Cash is used to acquire goods and services - These goods and services are sold to customers - The business collects cash from customers Operating cycle of a merchandising business - Merchandiser: a business that sells merchandise, or good, to customers. - Merchandiser inventory: the merchandise that a business sells to customer. - Wholesales: a type of merchandiser that buys a goods from manufacturers and then sells them to retailers. - Retailer: a type of merchandiser that buys merchandise wither form a manufacture or a wholesaler and the sells those goods to consumers. - Purchase inventory sell the inventory collect cash from customers. 3. Long-term v current assets and liability. - Long-term assets: an asset that will not be converted to cash or used up within the business’s operating cycle or one year, whichever is greater. Made up of three categories: long- term investment = bonds or stock, plant assets = property equipment and intangible assets = copyrights, trademarks. - Current assets: assets that is expected to be converted to cash, sold, or used up during the next 12 months or within the business’s normal operating cycle if the cycle is longer than a year. Cash, notes receivables, accounts receivables, supplies, prepaid and inventory. - Current liability : that must be paid with cash with goods and services within one year or within the longer entity’s operating cycle if the cycle is longer than one year. Salaries payable, interest payable and unearned revenue area all current liabilities. - Long - term liability: a liability that does not need to be paid within the entity’s operating cycle, whichever is longer. Note payable such as a mortgage on a building. 4. Calculate current assets: 5. Calculate current liabilities: 6. Long term liability: 7. Temporary account: an account that relates to a particular accounting period and is closed at the end of that period—the revenues expense income summary and owner, withdrawals
accounts also known as nominal accounts. Vs. Permanent account: an account that in not closed at the end of the period—the assets, liability, owner, capital accounts. 8. Closing revenue: debits service revenue and credit income summery. 9. Closing expanse: debits income summery and credit expanses. 10. Closing income summary: debit income summary and credit owner equity. 11. Temporary accounts: revenues expense and owner withdrawal. 12. Closing process: a step in the accounting cycle that occurs at the end of the period. The closing process consists of journalizing and posting the closing entries to set the balances of the revenues, expenses, income summary and owner withdrawals accounts to zero for the next period.

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