1. Unit IV Flashcards
Chapter 4

2. Accounting cycle Review The process by which companies#1
Accounting cycle
Review
The process by which companies
produce their financial statements
for a specific period.
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3. Classified balance sheet#2
Review
A balance sheet that places each
asset and each liability into a
specific category.
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4. Liquidity Review #3 SHOW NEXT A measure of how quickly an item
can be converted to cash.
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5. Closing entries Review #4 SHOW NEXT
Entries that transfer the revenues,
expenses, and Owner, Withdrawals
balances to the Owner, Capital
account to prepare the company’s
books for the next period.
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6. Closing process Review #5 SHOW NEXT MARK FOR REVIEW
A step in the accounting cycle that
occurs at the end of the period.
The closing process consists of
journalizing and posting the closing
entries to set the balances of
the revenues, expenses, Income
Summary, and Owner, Withdrawals
accounts to zero for the next
period.
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7. Current asset Review #6 SHOW NEXT An asset that is expected to be
converted to cash, sold, or used
up during the next 12 months
or within the business’s normal
operating cycle if the cycle is longer
than a year.
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8. Current liability Review #7 A liability that must be paid with
cash or with goods and services
within one year or within the
entity’s operating cycle if the cycle is
longer than a year.
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9. Review Measures the company’s ability to#8
Current ratio
Review
Measures the company’s ability to
pay current liabilities from current
assets. Total current assets / Total
current liabilities.
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10. Review #9 Income Summary SHOW NEXT A temporary account into which
revenues and expenses are
transferred prior to their final
transfer into the Owner, Capital
account. Summarizes net income
(or net loss) for the period.
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11. Review #10 Intangible asset SHOW NEXT
An asset with no physical form that
is valuable because of the special
rights it carries.
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12. Review #11 Long-term asset SHOW NEXT
An asset that will not be converted
to cash or used up within the
business’s operating cycle or one
year, whichever is greater.
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13. Review #12 Long-term liability SHOW NEXT
A liability that does not need to be
paid within one year or within the
entity’s operating cycle, whichever
is longer.
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14. Review #13 Operating cycle SHOW NEXT
The time span during which cash is
paid for goods and services, which
are then sold to customers from
whom the business collects cash.
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15. Review #14 Permanent account SHOW NEXT An account that is not closed
at the end of the period—
the asset, liability, and Owner,
Capital accounts.
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16. Post-closing trial balance
#15
Post-closing trial balance
Review
A list of the accounts and their
balances at the end of the period
after journalizing and posting the
closing entries. It should include
only permanent accounts.
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17. Review #16 Reversing entry SHOW NEXT
A special journal entry that eases
the burden of accounting for
transactions in the next period.
Such entries are the exact opposite
of a prior adjusting entry.
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18. Review #17 Temporary account SHOW NEXT An account that relates to a
particular accounting period and is
closed at the end of that period—
the revenues, expenses, Income
Summary, and Owner, Withdrawals
accounts.
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19. Reference Miller-Nobles, T. , Mattison, B. , & Matsumura, E. M. (2016)
Reference Miller-Nobles, T., Mattison, B., & Matsumura, E. M. (2016). Horngren’s accounting (11th ed.). Upper Saddle River, NJ: Pearson.
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