| A | B |
|---|
| Adjusting Entry | used to record items used in a business that are paid for in advance. |
| Prepaid Expenses | assets that are prepaid like insurance and office supplies and recorded as an expense for the period in which they are used up. |
| Depreciation | allocating the use of equipment as an expense for a period. |
| Sales Tax | a liability that is owed based upon the amount of sales tax you charged your customers. |
| Owner Withdrawals | an owner withdrawing money from a business which decreases the owner’s capital. |
| Bank Reconciliation | the process of resolving the differences between the bank statement and the checking account. |
| Outstanding Check | checks written by the business but not paid by the bank |
| Deposits in Transit | Deposits that were made too late to be included on the bank statement. |
| Trial Balance | in traditional accounting, it proves that debits equal credits. |
| Standard Profit and Loss Statement | this statement is also known as the Income Statement. |
| Standard Balance Sheet | proves the fundamental accounting equation: Assets = Liabilities + Owners’ Equity. |
| Closing Entries | four entries that need to be made at the end of a fiscal year to close income, expenses, the withdrawal account and transfer the net income into owners’ equity. |
| Post-Closing Trial Balance | proves that debits still equal credits after the adjusting and closing entries have been made. |
