chapter 3 section 1

collects and processes transaction data and then disseminates the financial information to interest parites

a happening of consequence. an event generally is the source or cause of changes in assets, liabilities and equity. can be internal or external

external event involving a transfer or exchange between two or more entities

a systematic arrangement that shows the effect of transactions and other events on a specific element. Companies keep a separate account for each asset, liability, revenue, expense and capital (owner's equity). t account

accounts are assets, liability and equity accounts appear on the balance sheet

accounts are revenue, expense, dividend accounts, except for dividends, they appears on the income statement. companies periodically close nominal accounts; they don't lose real accounts

the book (or computer printouts) containing the accounts

collection of asset, liability, owner's equity, revenue, expense account

contains the details related to a given general ledger account

the book of original entry where the company initially records transactions and selected other events. transferred from the book of original entry, the journal, to the ledger. entering it is called journalization

process of transferring the essential facts and figures from the book of original entry to the ledger accounts

the list of all open accounts in the ledger and their balances; companies may prepare a trial balance at any time

trial balance taken immediately after all adjustments have been posted

a trial balance taken immediately after closing entries have been posted

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

statements that reflect the collection, tabulation and final summarization of the accounting data. four statements: balance sheet, income statement, statement of cash flows, statement of RE, closing entries

shows the financial condition of the enterprise at the end of a period

measures the results of operations during the period

reports the cash provided and used by operating, investing and financing activities during the period

reconciles the balance of the RE account from the beginning to the end of the period

formal process by which the enterprise reduces all nominal accounts to zero and determines and transfers the net income or net loss to an owners' equity account. also called "closing the ledger", "closing the books", "closing"