chapter 3 section 1

  1. accounting information system
    collects and processes transaction data and then disseminates the financial information to interest parites
  2. events
    a happening of consequence. an event generally is the source or cause of changes in assets, liabilities and equity. can be internal or external
  3. transaction
    external event involving a transfer or exchange between two or more entities
  4. account
    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
  5. real accounts (permanent)
    accounts are assets, liability and equity accounts appear on the balance sheet
  6. nominal accounts (temporary)
    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
  7. ledger
    the book (or computer printouts) containing the accounts
  8. general ledger
    collection of asset, liability, owner's equity, revenue, expense account
  9. subsidiary ledger
    contains the details related to a given general ledger account
  10. journal
    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
  11. posting
    process of transferring the essential facts and figures from the book of original entry to the ledger accounts
  12. trial balance
    the list of all open accounts in the ledger and their balances; companies may prepare a trial balance at any time
  13. adjusted trial balance
    trial balance taken immediately after all adjustments have been posted
  14. post-closing (after closing trial balance)
    a trial balance taken immediately after closing entries have been posted
  15. adjusting entries
    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
  16. 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
  17. balance sheet
    shows the financial condition of the enterprise at the end of a period
  18. income statement
    measures the results of operations during the period
  19. statement of cash flows
    reports the cash provided and used by operating, investing and financing activities during the period
  20. statement of RE
    reconciles the balance of the RE account from the beginning to the end of the period
  21. closing entries
    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"
Card Set
chapter 3 section 1
chapter 3 section 1 vocab for account test 1