Accounting 101 Chapter 4

Accountants use a(an)__________to organize and check data before preparing the financial statements necessary to complete the accounting cycle

• worksheet

• spreadsheet

• Trial Balance

• Adjusted Trial Balance

Most important function of the worksheet is to

• find and correct errors before financial statements are prepared

• record the adjusting entries

• prepare the general ledger

• create a trial balance

The process of calculating the latest up-to-date balance of each account at the end of an accounting period

• posting

• adjusting

• totaling

• closing

When an asset such as prepaid rent begins to expire or be used up, it becomes a(an)

• expense

• liability

• contra asset

• revenue

Allocation of the cost of an asset over its expected useful life is called

• historical cost

• depreciation

• residual value

• accumulated depreciation

Actual cost of an asset at time of purchase

• sale price

• historical cost

• residual value

• depreciation

Estimated value of an asset after all the allowable depreciation has been taken

• historical cost

• original cost

• residual value

• depreciation

States that expenses will be matched to revenues in the period in which they are incurred

• Matching Principle

• Straight Line Depreciation

• Depreciation Expense

• Historical Cost

Contra-asset account that summarizes or accumulates the amount of depreciation that has been taken on an asset.

• Depreciation Expense

• Income Summary

• Accumulated Depreciation

• Straight Line Depreciation

Cost of Equipment - Residual Value / Estimated Years of Usefulness =

• Depreciation per year

• Historical Cost

• Accumulated Depreciation

• Depreciation per month