| A | B |
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| Accounting cycle | recurring steps performed each accounting period, starting with analyzing transactions and continuing through the post-closing trial balance (or reversing entries) |
| Classified balance sheet | balance sheet that presents assets and liabilities in relevant subgroups |
| Closing entries | entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense, and withdrawals accounts to the owner's capital account |
| Closing process | necessary steps to prepare the accounts for recording the transactions of the next period |
| Current assets | cash or other assets that are expected to be sold, collected, or used within the longer of one year or the company's operating cycle |
| Current liabilities | obligations due to be paid or settled within the longer of one year or the operating cycle |
| Current ratio | ratio used to evaluate a company's ability to pay its short-term obligations, calculated by dividing current assets by current liabilities |
| Income Summary | temporary account used only in the closing process to which the balances of revenue and expense accounts are transferred; its balance is transferred to the owner's capital account |
| Intangible assets | long-term assets (resources) used to produce or sell products or services; they usually lack physical form and their benefits are uncertain |
| Long-term investments | assets such as notes receivable and investments in stocks and bonds that are held for more than the longer of one year or the operating cycle |
| Long-term liabilities | obligations that are not due to be paid within the longer of one year or the operating cycle |
| Nominal accounts | same as temporary account |
| Operating cycle | normal time between paying cash for merchandise or employee services and receiving cash from customers |
| Owner's equity | owner's claim on a company's assets |
| Permanent accounts | accounts used to report activities related to one or more future periods; balance sheet accounts whose balances are not closed; also called real accounts |
| Plant assets | tangible long-lived assets used to produce or sell products or services; also called "property, plant and equipment" or "fixed assets" |
| Post-closing trial balance | list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted |
| Pro forma financial statements | statements that show the effects of proposed transactions as if they had occurred |
| Real accounts | same as permanent accounts |
| Reversing entries | optional entries recorded at the beginning of a new period that prepare the accounts for the usual journal entries as if adjusting entries had not occurred |
| Temporary accounts | accounts used to record revenues, expenses, and withdrawals; they are closed at the end of each period; also called "nominal accounts" |
| Unclassified balance sheet | balance sheet that broadly groups assets, liabilities, and equity accounts |
| Working papers | analyses and other informal reports prepared by accountants when organizing information for formal reports and financial statements |
| Work sheet | spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements; an optional step in the accounting process |
