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