BUS103: Introduction to Financial Accounting

2a. Describe the accounting cycle and be able to identify specific debits and credits, journals, t-accounts, a trial balance, and resulting financial statements

T-accounts are useful in keeping track of debits and credits as business transactions take place. The ending balances in T-accounts are generally "normal" balances. Those balances are reported in a trial balance that is adjusted and ultimately used to produce financial statements.

Draw a flow chart of the accounting cycle that begins with business transactions and ends with financial statements. Check to see that your flow chart includes every step in the accounting cycle.

For a thorough review of the accounting cycle, read The Accounting Cycle on pages 86-114.

 

Unit 2 Vocabulary

Be sure you understand these terms as you study for the final exam. Try to think of the reason why each term is included.

• Accounting cycle
• Accrual basis of accounting
• Chart of accounts
• Credit
• Credit balance
• Debit
• Debit balance
• Journal
• Journal entry
• Ledger
• Note
• Permanent accounts
• T-accounts
• Temporary accounts
• Trial balance