- accounting cycleThe procedures needed to process transactions through an accounting system; including journalization, posting, adjusting, and preparing financial statements
- capital stockA non-specific reference to the ownership interests of shareholders in a corporation
- closing processThe process by which temporary accounts are "zeroed" out and the effects transferred to retained earnings
- current assetsAssets that will be converted into cash or consumed within one year or the operating cycle, whichever is longer
- current liabilitiesObligations that will be liquidated within one year or the operating cycle, whichever is longer
- current ratioA measure of liquidity, calculated by dividing current assets by current liabilities
- full disclosure principleAll relevant facts that would influence investors' and creditors' judgments about the company are disclosed in the financial statements or related notes
- income summaryA non-financial statement account used only to facilitate the closing process by summarizing and zeroing-out the revenue and expense accounts
- intangible assetLack physical existence, and include items like purchased patents and copyrights
- liquidityThe ability of a firm to meet its near-term obligations as they come due
- long-term investmentsInvestments made for long-term holding purposes; including land for speculation, securities of other companies, etc.
- long-term liabilitiesAny obligation that is not current, and include bank loans, mortgage notes, and the like
- nominal accountsAccounts that will be reset to a zero balance with each new accounting period; revenue, expense, and dividend accounts (also called "temporary" accounts)
- operating cycleThe period of time it takes to convert cash back into cash (i.e., purchase inventory, sell the inventory on account, and collect the receivable)
- other assetsThe category of a classified balance sheet for reporting assets that are not logically attached to one of the other specific sections
- post-closing trial balanceReveals the balance of accounts after the closing process, and consists of balance sheet accounts only
- property, plant, and equipmentAssets with long lives that will be used in an entity's production processes; land, buildings, and equipment
- quick ratioAn extreme measure of liquidity, calculated by dividing quick assets (cash, short-term investments, and accounts receivable) by current liabilities
- real accountsAsset, liability, and equity accounts; balances are carried forward from the end of one period into the beginning of the next period
- retained earningsThe excess of a corporation's income over its dividends
- reversing entryOptional accounting procedure which may prove useful in simplifying record keeping; a journal entry to "undo" an adjusting entry
- temporary accountsAccounts that will be reset to a zero balance with each new accounting period; revenue, expense, and dividend accounts (also called "nominal" accounts)
- working capitalThe difference between current assets and current liabilities
