Accounting cycle: 1)collect&verify source documents 2)analyze each transaction 3)journalize each transaction 4)post to ledger 5)prepare trial

balance 6)prepare worksheet 7)prepare financial statements 8)journalize & post closing entires 9)prepare post-closing trial balance. 3 forms bus. Org: 1)sole proprietorship-bus. Owned by 1 person 2)partnership-bus. Owned by 2 or more ppl 3)corporation-bus. Recognized by law to have a life of its own 3 bus. Operations: 1)service-provides needed service for a fee 2)merchandising- buys finished products & resells them to individuals or other bus.s 3)manufacturing- buys raw materials, use labor & machinery to transform them into finished products. GAAP- bus. entity: exists independently of its owners personal holdings accounting period: period of time covered by an accounting report going concern: bus. has ability to survive and operate indefinitely (expected to continue to grow). Chart of accounts: list of all accounts used by a bus. Gross profit: amount earned total Net profit: earnings after deductions #ing system for COA: 1-assets 2- liabilities 3- O/E 4- rev 5- exp. Slide error: occurs when a decimal point is moved by mistake. Ruling: drawing a line: single rule=entries are ready to be totaled. Quick ratio: a measure of the relationship between short-term assets and current liabilities. (cash and receivables/current liabilities)=quick ratio. Compound entry: journal entry with two or more debits or two or more credits. Income Statement: For the Month Ended Dec. 31, 20xx. Revenues- List revenues with indent in debit with ruling under balances. Indent Total Revenue in credit. Skip line Expenses- List expenses with indent in debit with ruling under balances. Indent Total Expense in credit with double ruling. Net Income/Loss: combine 2 totals. Statement of Chances in Owners Equity: For the Month Ended Dec. 31, 20xx. Beginning Capital, December 1, 20xx with balance in credit. Indent Investments by Owner in debit. Net Income with equivalent indent in debit and line under balance. Total Increase in Capital (no indent) in credit account and line under. Subtotal indent in credit adding increase with beginning. Skip line- Withdrawals by owner in debit. Indent Net Loss in debit. No indent Total Decrease in Capital in credit with line under balance. Ending Capital, December 31, 20xx in credit subtracting subtotal from total decrease. Balance Sheet: December 31, 20xx. Assets centered. List all permanent assets in debits with line under. Indent Total Assets in credit with double line. Liabilities centered. List Liabilities in debit with line under. Indent Total Liabilities in credit. Center Owners Equity. Write Capital Account name in credit with line under. Indent Total Liabilities and O/E in credit with double lines (add total liabilities and O/E) from ending capital in Statement of Changes. Post-Closing Trial Balance: December 31, 20xx. List all permanent accounts. Assets in debit, Liabilities and Capital in credit with line under in debit and credit. Indent Totals and added all debits for total and all credits for total (should be equal) with double line under. Closing Entries include 1) Revenues with all revenues (debited) and Income Summary (credited)\. 2) Expenses with all expenses (credited) and Income Summary (debited). 3) Net Income/Loss with Income Summary (debited) and Capital (credited). 4) Withdrawal with withdrawal account (credited) and Income Summary (debited).