Operating Cycle and Account Classification

A book that records business transactions in chronological order. It's like a diary for your financial activities.

A special type of journal that simplifies recording common, repetitive transactions. Think of it like a shortcut for your bookkeeping.

The final destination for organizing transactions. It groups similar transactions together in specific accounts.

The process of transferring information from the Journal to the Ledger. It's like moving things from a temporary folder to their final destinations.

Entries made at the end of an accounting period to ensure financial statements are up-to-date and accurate.

The sequence of events involved in a merchandising business, starting with cash on hand and ending with receiving payment from customers.

A document issued by a common carrier, like a trucking company, detailing the terms of shipment.

A formal notice sent to someone who owes money, listing the amounts owed and due dates.

A form issued by a company's representative, proving that cash was actually received.

A document issued by a bank, indicating that cash or checks were deposited and credited to an account.

A written order from a depositor instructing their bank to pay a specific amount of money to someone.

A document listing merchandise needed and requested by a department within a company.

A document created by a buyer to formally request goods from a supplier.

A document containing information about goods received from a vendor, confirming delivery and quantity.

A document issued to a customer for returned or defective goods, crediting their account.

Transactions related to the day-to-day operations of a business, recorded in financial records.

Transactions that do not impact a business's financial records, typically personal in nature.

The system of updating inventory records every time there is a change in quantity.

The system of updating inventory records only when a physical count is done.

These are expenses that have been paid for, but not yet used. For example, you paid for a full year of insurance, but only a part of it has been used up.

This is income that has been received but not yet earned. For example, you received rent for the whole month, but the tenant has only stayed for a week.

Expenses that have been incurred but not yet paid. For example, you have used electricity, but haven't received the bill yet.

Income earned but not yet received. For example, you have completed a freelance job, but haven't gotten paid yet.

This is the loss resulting from accounts that are deemed uncollectible. For example, a customer owes money but is unlikely to pay it back.

A financial statement that shows a company's assets, liabilities, and owner's equity at a specific point in time.

The things or resources a company owns, such as cash, equipment, and accounts receivable.

What a company owes to others, including debts, notes, and accounts payable.

The owner's investment in a company, representing their claim on the company's assets.

A financial statement showing a company's revenues, expenses, and net income over a period of time.

The increase in a company's value from selling goods or services.

The costs incurred by a company to generate revenue.

The difference between revenue and expenses; it represents the company's profitability.

The amount of money a company makes from its primary business operations, calculated as Revenue - Cost of Goods Sold (COGS).

A list of all real accounts (assets, liabilities, and equity) after closing entries are made. It excludes temporary accounts (revenue, expenses, and drawings).

An expense account that records the cost of using a long-term asset over time.

A contra-asset account that accumulates the total depreciation expense recorded for an asset.

The method of recognizing supplies used in a business. The unused amount is recorded as an asset.

The method of recognizing supplies used in a business. The used amount is recorded as an expense.

A formal document that lists the balances of all accounts in a company's accounting system at a specific point in time.

A section of the Trial Balance that outlines the different categories of accounts. It helps organize them logically.

Written documents that convey the business activities and financial performance of a company.

A financial statement that tracks changes in a company's shareholder equity over a specific period.