Question

Define in own words please

CHAPTER 4 – Completing the Accounting Cycle

1. Accounting cycle
2. Closing entries
3. Closing process
4. Closing the books
5. Current liabilities
6. First closing entry
7. Fiscal year
8. Liquidity
9. Long-term liabilities
10. Current Ratio – write the equation for definition
11. Notes receivable
12. Reversing entries
13. Solvency
14. Temporary (nominal) accounts
15. Working capital – write the equation for definition

Answer 1

1. Accounting cycle

Accounting cycle is a process which includes 8 steps. It begins when a transaction occurs i.e with first step it includes identification transactions,
Second is recording entries into journal,
Third is to posting entries into ledger
Fourth will be adjusting the trial balance
Fifth is preparing a worksheet
Sixth is to record adjusting journal entries,
Sevnth is to adjust the trial balance
And last is to prepare trial balance.

Hence accounting cycle is a process which includes all the above steps

2. Closing entry

Closing entry is that entry which is posted into ledger account at the end of an accounting period and balance is tranfer to balance sheet.

3. Closing process

Closing process means an important end of year period step to making accounts. Closing process occurs at the end of accounting cycle when final transactions are posted into balance sheet and accounts are closed.

4. Closing the books

Closing the books means that all the transaction related to a particular account of a certain period is accounted in balance sheet and income statement and that information and transaction is accurate for that period is also to make sure.