The process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance.

Another name for the income summary account because it has the effect of clearing the revenue and expense accounts of their balances.

The entries that transfer the balances of the revenue, expense, and drawing accounts to the owner’s capital account.

converting temporary account balances to zero by transferring the revenue and expense account balances to Income Summary, transferring the income summary account balance to the owner’s capital account, and transferring the owner’s drawing account to the o

The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period.

Cash and other assets that are expected to be converted to cash or sold or used up, usually within one year or less, through the normal operations of the business.

Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets.

The annual accounting period adopted by a business.

fixed assets (or plant assets)

Longterm or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.

An account to which the revenue and expense account balances are transferred at the end of a period.

long-term liabilities

Liabilities that usually will not be due for more than one year.

natural business year

A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.

A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.

real (permanent) accounts

Term for balance sheet accounts because they are relatively permanent and carried forward from year to year.

temporary (nominal) accounts

Accounts that report amounts for only one period.

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FinAcc Ch 4

Question	Answer
accounting cycle	The process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance.
clearing account	Another name for the income summary account because it has the effect of clearing the revenue and expense accounts of their balances.
closing entries	The entries that transfer the balances of the revenue, expense, and drawing accounts to the owner’s capital account.
closing process	converting temporary account balances to zero by transferring the revenue and expense account balances to Income Summary, transferring the income summary account balance to the owner’s capital account, and transferring the owner’s drawing account to the o
closing the books	The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period.
current assets	Cash and other assets that are expected to be converted to cash or sold or used up, usually within one year or less, through the normal operations of the business.
current liabilities	Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets.
fiscal year	The annual accounting period adopted by a business.
fixed assets (or plant assets)	Longterm or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.
Income Summary	An account to which the revenue and expense account balances are transferred at the end of a period.
long-term liabilities	Liabilities that usually will not be due for more than one year.
natural business year	A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.
notes receivable	A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.
real (permanent) accounts	Term for balance sheet accounts because they are relatively permanent and carried forward from year to year.
temporary (nominal) accounts	Accounts that report amounts for only one period.

Created by: facelessome1

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