A group of accounts for a business entity is called a ledger. A list of the accounts used in the
ledger is called a chart of accounts.
An account is a record of increases and decreases in a specific asset, liability, owner's equity,
Accounts Reveivable are amounts due from customers from credit sales. They occur when a
customer uses credit cards issued by third parties and when a company gives credit directly to
customers. They are classified on the balance s
The closing process is an important step at end of the accounting period after financial
statements have been completed. Here are the steps in closing process:
1. Identify accounts for closing.
2. Record and post closing entries.
Accounting is an information and measurement system that identifies, records and
communicates relevant, reliable, and comparable information about an organizations business
activities. Accounting is guided by principles, standards, concepts, and assu
Accounting Basis and Concepts
Accounting Period Concept - requires an organizations revenues and expenses be reported in the
proper time period. Time periods can be a month, a quarter, a six-month interval, or a year
Sarbanes Oxley Act of 2002 (SOX)
Congress passed the Sarbanes Oxley Act in response to financial scandals. The purpose of SOX
is to maintain public confidence and trust in the financial reporting of companies.
Internal control is defined as the polic
A physical inventory or count of the inventory is generally taken at the end of its fiscal year or
when inventory amounts are low (at least once per year). The physical inventory is used to
adjust the Inventory account balance to t
Merchandise consists of products, also called goods, that a company acquires to resell to
Reporting Income for a Merchandising Business - Revenue from selling merchandise (Sales)
minus the cost of merchandise sold
A subsidiary ledger contains detailed information on specific general ledger accounts. When a
general ledger account has a subsidiary ledger it is referred to as the control account.
Two of the most important subsidiary ledgers are