Accountin cycle.docVIP

Accounting cycle Standard set of accounting procedures to record transactions and prepare financial statements.  Accounting information system A system that collects and processes transaction data and then disseminates the financial information to interested parties.?Accounting information systems vary widely from one business to another, depending on the nature of the business and its transactions, the size of the company, the volume of data to be handled, and the informational demands.  Account A systematic arrangement that shows the effect of transactions and other events on a specific element (asset, liability, and soon).?Companies keep a separate account for each asset, liability, revenue, and expense, and for capital (stockholders equity).  Accrued expenses Expenses incurred but not yet paid or recorded at the statement date.?Examples are interest, rent, taxes, and salaries. An accrued expense on the books of one company is often an accrued revenue to another company.  Accrued revenues Revenues earned but not yet received in cash or recorded at the statement date.Accrued revenues result from the passing of time (e.g., interest revenue and rent revenue) or from unbilled or uncollected services that a company performed (e.g., commissions and fees).  Adjusted trial balance A trial balance prepared from a companys ledger accounts after journalizing and posting all adjusting entries.It shows the effects of all financial events that occurred during the accounting period.  Adjusting entry Adjustments made at the end of the accounting period to ensure that a company has recorded revenues in the period in which it earns them and recognized expenses in the period in which it incurs them—in other words, that it has followed the revenue recognition and expense recognition principles.?Companies often prepare adjustments after the balance sheet date but date the entries as of the balance sheet date.  Balance sheet Financial statement that sh