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| work sheet | a working paper used to collect information from the general ledger needed to prepare the financial statements |
| adjustment | an amount that is added to or subtracted from an account balance to bring that balance up to date |
| inventory | items of merchandise that a business has in stock |
| beginning inventory | the merchandise on hand at the beginning of the fiscal period |
| ending inventory | the merchandise on hand at the end of the fiscal period |
| net income | the amount left after expenses for the period are subtracted from revenue |
| net loss | the result of expenses being greater than gross profit on sales for the period |
| adjusting entries | journal entries made at the end of the fiscal period to update the balances of all general ledger accounts affected by adjustments |
| income statement | the financial statement that reports the net income or net loss earned by a business during the fiscal period |
| net sales | the amount resulting when the contra revenue accounts are subtracted from total sales; sales minus sales returns and allowances |
| cost of merchandise sold | the actual cost to the business of the merchandise sold to customers; beginning inventory plus net purchases minus ending inventory |
| net purchases | the amount of all costs related to merchandise purchased during the period; purchases plus transportation in minus purchases returns and allowances |
| gross profit on sales | the amount of profit made during the fiscal period before expenses are deducted; net sales minus the cost of merchandise sold |
| operating expenses | the cash spent or the assets consumed to earn revenue for the business |
| operating income | the taxable income of a corporation; the amount of income before federal income taxes; gross profit on sales minus total operating expenses |
| statement of retained earnings | the financial statement that reports the changes that have taken place in the retained earnings account during the fiscal period |
| balance sheet | the financial statement that reports the final, updated balances of all asset, liability, and stockholders' equity accounts as of a specific date |
| closing entries | jpurnal entries made at the end of the fiscal period to transfer the balances of the temporary capital accounts to a permanent general ledger account |
| post-closing trial balance | a report prepared to prove the equality of debits and credits in the general ledger after the adjusting and closing entries have been posted |
