Intermediate Accounting Exam #2 Questions and Answers (Graded A+)

Collects and processes transaction data and then disseminates the financial information to interested parties. - ANSWER-Accounting Information System Expenses incurred but not yet paid in cash or recorded. - ANSWER-Accrued Expenses The trial balance taken immediately after all adjustments have been posted. - ANSWER-Adjusted Trial Balance Entry 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. - ANSWER-Adjusting Entry Shows the financial condition of the enterprise at the end of the period. - ANSWER-Balance Sheet The difference between any depreciable asset's cost and its related accumulated depreciation. - ANSWER-Book Value 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 owner's equity account. - ANSWER-Closing Entries Reduces the balance of nominal (temporary) accounts to zero in order to prepare the accounts for the next period's transactions. - ANSWER-Closing Process Offsets an asset account on the balance sheet. - ANSWER-Contra Asset Account The process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner. - ANSWER-Depreciation Records the dual (two-sided) effect of each transaction in appropriate accounts. - ANSWER-Double-Entry Accounting A happening of consequence and the source or cause of changes in assets, liabilities, and equity. May be external or internal. - ANSWER-Event Reflect the collection, tabulation, and final summarization of the accounting data. - ANSWER-Financial Statements Chronologically lists transactions and other events, expressed in terms of debits and credits to accounts. - ANSWER-General Journal A collection of all the asset, liability, owner's equity, revenue, and expense accounts. - ANSWER-General Ledger Measures the results of operations during the period. - ANSWER-Income Statement 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. - ANSWER-Journal Entering transaction data into the journal. - ANSWER-Journalizing The book (or computer printouts) containing the accounts. - ANSWER-Ledger Temporary accounts (revenue, expense, and dividend) that appear on the income statement, except dividends. - ANSWER-Nominal Accounts A trial balance taken immediately after closing entries have been posted. - ANSWER-Post-Closing Trial Balance The process of transferring the essential facts and figures from the book of original entry to the ledger accounts. - ANSWER-Posting Expenses paid in cash before they are used or consumed. - ANSWER-Prepaid Expenses Permanent accounts (asset, liability, and equity) that appear on the balance sheet. - ANSWER-Real Accounts The exact opposite of the adjusting entry made in the previous period. - ANSWER-Reversing Entries Summarize transactions possessing a common characteristic (cash receipts, sales, purchases, cash payments). - ANSWER-Special Journals