Study Guide 6 - Part One - Identifying Accounting Terms

adjusting entries

Journal entries recorded to update general ledger accounts at the end of a fiscal period (p. 176)

work sheet

a columnar accounting form used to summarize the general ledger information needed to prepare financial statements (p.159)

income statement

a financial statement showing the revenue and expenses for a fiscal period (p. 170)

balance sheet

a financial statement that reports assets, liabilities, and owner's equity on a specific date (p. 169)

fiscal year

a fiscal period consisting of 12 consecutive months (p.159)

trial balance

a proof of equality of debits and credits in a general ledger (p.160)

prepaid expense

cash paid for an expense in one fiscal period that is not used until a later period (p.163)

adjustments

changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period (p. 163)

accrual basis of accounting

reporting income when it is earned and expenses when they are incurred (p. 163)

cash basis of accounting

reporting income when the cash is received and expenses when the cash is paid (p. 163)

net loss

the difference between total revenue and total expenses when total expenses are greater (p. 172)

net income

the difference between total revenue and total expenses when total revenue is greater (p.171)

fiscal period

the length of time for which a business summarizes its financial information and reports its financial performance (p. 159)