This exercise will quiz you about terminology used in this chapter.

A list of accounting terms with which you should be familiar appears below:

Classified balance sheet

Long-term liabilities (long-term debt)

Closing entries

Operating cycle

Correcting entries

Permanent (real) accounts

Current assets

Post-closing trial balance

Current liabilities

Property, plant, and equipment

Income Summary

Reversing entry

Intangible assets

Stockholders” equity

Liquidity

Temporary (nominal) accounts

Long-term investments

Worksheet

Instructions

For each item below, enter in the blank the term that is described.

  1. A multiple-column form that may be used in the adjustment process and in preparing financial statements.
  2. Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders” equity account. For a corporation, the temporary accounts are closed to Retained Earnings.
  3. A list of permanent accounts and their balances after closing entries have been journalized and posted.
  4. Revenue, expense, and dividend accounts whose balances are transferred to retained earnings at the end of an accounting period.
  5. Accounts whose balances are carried forward to the next accounting period. Balance sheet accounts.
  6. A temporary account used in closing revenue and expense accounts.
  7. An entry made at the beginning of a new accounting period that is the exact opposite of the related adjusting entry made in the previous period.
  8. The average time required to go from cash to cash in producing revenues.
  9. Cash and other resources that are reasonably expected to be realized in cash or sold or consumed in the business within the next year or the operating cycle, whichever is longer.
  10. Resources such as stocks and bonds of other entities not expected to be realized in cash within the next year or operating cycle.
  11. Assets of a relatively permanent nature that are being used in the business and not intended for resale.
  12. Noncurrent resources that do not have physical substance.
  13. Obligations reasonably expected to be paid from existing current assets or through the creation of other current liabilities within the next year or operating cycle, whichever is longer.
  14. Obligations expected to be paid after one year or to be settled by the use of assets other than current assets or by the incurrence of long-term debt.
  15. Owners” equity of a corporation; the ownership claim of shareholders on total assets.
  16. The ability of a company to pay obligations that are expected to become due within the next year or operating cycle.
  17. Entries to correct errors made in recording transactions.
  18. A balance sheet that contains a number of standard classifications or sections.