BAT4M - FINAL EXAM KEY TERMS

The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period is called:

• closing the books

• cost of goods sold

• temporary accounts

• management by exception

A reduction in the cost of purchases resulting from dissatisfaction with merchandise purchased is known as:

• purchase discounts

• cost of goods sold

• retail method

• purchase returns and allowances

Activities that include (a) obtaining cash from issuing debt and repaying the amounts borrowed and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends are referred to as:

• Financing Activities

• Assets

• Accounting

• Current Assets

Definition: beginning inventory plus cost of goods purchased

• net purchases

• cost of goods available for sale

• ending inventory

• cost of goods sold

Definition: expenses incurred but not yet paid in cash or recorded

• accrued expenses

• permanent accounts

• accrued revenues

• prepaid expenses

Definition: Optional entries recorded at the beginning of a period that prepare the accounts for the usual journal entries as if adjusting entries had not occurred in the prior period.

• Reversing Entries

• Correcting Entries

• Closing The Books

• Temporary Accounts

Definition: the ease with which an asset can be converted into cash

• Current Assets

• Liquidity

• Assets

• Profitability

Definition: A system that records the two-sided effect of each transaction in appropriate accounts.

• Trial balance

• Posting

• Double-entry system

• Operating activities

Definition: a list of accounts and account numbers used by a business

• posting

• chart of accounts

• t account

• auditing

Definition: accounts used to accumulate information until it is transferred to the owner's capital account.

• accrued revenues

• contra account

• temporary accounts

• accrued expenses