| A | B |
|---|
| Balance sheet | “a report of the balances in the permanent accounts on a specific date.” |
| Current assets | “The assets that are either used up or converted to cash during the normal operating cycle of the business.” |
| Current liabilities | “The debts of the business that must be paid within the next accounting period.” |
| Current ratio | “The relationship between current assets and current liabilities; calculated by dividing current assets by current liabilities.” |
| Financial statements | “Reports prepared to summarize the changes resulting from business transactions that occur during an accounting period.” |
| Income statements | “A report of the net income or net loss for a specific period; sometimes called a profit-and-loss statement or earnings statement.” |
| Liquidity ratio | “The measure of a business’s ability to pay its current debts as they become due and to provide for unexpected needs of cash.” |
| Profitability ratio | “a ratio used to evaluate the earnings performance of a business during the accounting period.” |
| Quick ratio | “a measure of the relationship between short-term assets and current liabilities; calculated by dividing the total cash and receivables by the current liabilities.” |
| Ratio analysis | “The process of evaluating the relationship between various amounts in the financial statements.” |
| Report form | “a balance sheet format that lists classifications one under another.” |
| Return on sales | “a ratio that examines the portion of each sales dollar that represents profit; calculated by dividing net income by sales.” |
| Statement of cash flows | “A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a period.” |
| Statement of changes in owner’s equity | “A financial statement that summarizes changes in the owner’s capital account as a result of business transactions during the period.” |
| Working capital | “The amount by which current assets exceed current liabilities.” |
| Closing Entries | "Journal entries made to close, or reduce to zero, the balances in the temporary accounts and to transfer the net income or net loss for the period to the capital account." |
| Compund Entry | "A journal entry with two or more debits or two or more credits." |
| Income Summary Account | "The general ledger account used to summarize the revenue and expenses for the period." |
| Post-Closing Trial Balance | "A list of the permanent general ledger account balances; it is prepared to prove the ledger after the closing entries are posted." |
