ACG 3131 Exam 1 Study Set with Questions and Correct Answers
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Course
ACG 3131
Institution
ACG 3131
accounting information system collects and processes transaction data and then disseminates the financial information to interested parties. They vary widely from one business to another.
event A happening of consequence. An event generally is the source or cause of changes in assets, liabilities,...
ACG 3131 Exam 1 Study Set with
Questions and Correct Answers
accounting information system ✅collects and processes transaction data and then
disseminates the financial information to interested parties. They vary widely from one
business to another.
event ✅A happening of consequence. An event generally is the source or cause of
changes in assets, liabilities, and equity. Events may be external or internal.
transaction ✅An external event involving a transfer or exchange between two or more
entities.
account ✅A systematic arrangement that shows the effect of transactions and other
events on a specific element (asset, liability, and so on). Companies keep a separate
account for each asset, liability, revenue, and expense, and for capital (owners' equity).
Because the format of an account often resembles the letter T, it is sometimes referred
to as a T-account.
real accounts ✅are asset, liability, and equity accounts; they appear on the balance
sheet. they do not close these accounts
nominal accounts ✅are revenue, expense, and dividend accounts; except for
dividends, they appear on the income statement. Companies periodically close nominal
accounts
ledger ✅The book (or computer printouts) containing the accounts.
general ledger ✅a collection of all the asset, liability, owners' equity, revenue, and
expense accounts.
subsidiary ledger ✅contains the details related to a given general ledger account.
journal ✅The "book of original entry" where the company initially records transactions
and selected other events. Various amounts are transferred from the book of original
entry to the ledger.
posting ✅The process of transferring the essential facts and figures from the book of
original entry to the ledger accounts.
1. In the ledger, in the appropriate columns of the account(s) debited, enter the date,
journal page, and debit amount shown in the journal.
, 2. In the reference column of the journal, write the account number to which the debit
amount was posted.
3. In the ledger, in the appropriate columns of the account(s) credited, enter the date,
journal page, and credit amount shown in the journal.
4. In the reference column of the journal, write the account number to which the credit
amount was posted.
trial balance ✅The list of all open accounts in the ledger and their balances.
companies may prepare this at any time. does not prove that a company recorded all
transactions or that the ledger is correct.
adjusted trial balance ✅The trial balance taken immediately after all adjustments have
been posted. the purpose is to prove the equality of the total debit balances and the
total credit balances in the ledger after all adjustments. Because the accounts contain
all data needed for financial statements, this is the primary basis for the preparation of
financial statements.
post-closing ✅A trial balance taken immediately after closing entries have been
posted. A company may take a third trial balance after posting the closing entries. The
purpose of this trial balance is to prove the equality of the permanent account balances
that the company carries forward into the next accounting period. Since all temporary
accounts will have zero balances, the post-closing trial balance will contain only
permanent (real)—balance sheet—accounts.
adjusting entries ✅Entries made at the end of an accounting period to bring all
accounts up to date on an accrual basis, so that the company can prepare correct
financial statements. Can be classified as prepayment or accruals.
financial statements ✅statements that reflect the collection, tabulation, and final
summarization of the accounting data. Four statements are involved.
balance sheet ✅shows the financial condition of the enterprise at the end of a period
statements of cash flows ✅reports the cash provided and used by operating, investing,
and financing activities during the period
income statement ✅measures the results of operations during the period. classifies
amounts into such categories as gross profit on sales, income from operations, income
before taxes, and net income.
statement of retained earnings ✅reconciles the balance of the retained earnings
account from the beginning to the end of the period.
closing entries ✅The formal process by which the enterprise reduces all nominal
accounts to zero and determines and transfers the net income or net loss to an owners'
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