Key Terms: Chapter Four
The procedures needed to process transactions through an accounting system; including journalization, posting, adjusting, and preparing financial statements
A non-specific reference to the ownership interests of shareholders in a corporation
The process by which temporary accounts are "zeroed" out and the effects transferred to retained earnings
Assets that will be converted into cash or consumed within one year or the operating cycle, whichever is longer
Obligations that will be liquidated within one year or the operating cycle, whichever is longer
A measure of liquidity, calculated by dividing current assets by current liabilities
All relevant facts that would influence investors' and creditors' judgments about the company are disclosed in the financial statements or related notes
A non-financial statement account used only to facilitate the closing process by summarizing and zeroing-out the revenue and expense accounts
Lack physical existence, and include items like purchased patents and copyrights
The ability of a firm to meet its near-term obligations as they come due
Investments made for long-term holding purposes; including land for speculation, securities of other companies, etc.
Any obligation that is not current, and include bank loans, mortgage notes, and the like
Accounts that will be reset to a zero balance with each new accounting period; revenue, expense, and dividend accounts (also called "temporary" accounts)
The period of time it takes to convert cash back into cash (i.e., purchase inventory, sell the inventory on account, and collect the receivable)
The category of a classified balance sheet for reporting assets that are not logically attached to one of the other specific sections
Reveals the balance of accounts after the closing process, and consists of balance sheet accounts only
Assets with long lives that will be used in an entity's production processes; land, buildings, and equipment
An extreme measure of liquidity, calculated by dividing quick assets (cash, short-term investments, and accounts receivable) by current liabilities
Asset, liability, and equity accounts; balances are carried forward from the end of one period into the beginning of the next period
Optional accounting procedure which may prove useful in simplifying record keeping; a journal entry to "undo" an adjusting entry
Accounts that will be reset to a zero balance with each new accounting period; revenue, expense, and dividend accounts (also called "nominal" accounts)
The difference between current assets and current liabilities