Adjusting entries are used primarily to correct accounting and bookkeeping errors.

The Income Summary account is a permanent(real) account.

Revenue and expense accounts are permanent accounts and should not be closed at the end of the accounting period.

Current liabilities are cash, accounts receivable, inventories and other resources that are expected to be sold, collected or used within the longer of one year or the company's operating cycle.

Credit sales are recorded by crediting accounts receivable.

The maturity date of a note refers to the date the note is signed.

Receivables can be used to obtain cash by either selling them or using them as security for a loan.

A contingent liability is an obligation to make a future payment if an uncertain future event occurs.

The aging of accounts receivable involves examining each account receivable and grouping by days past due.

Accounts Receivable are supported with an accounts receivable subsidiary ledger.

The current portion of notes receivable is classified as a current liability.

The income of a regular corporation is subject to double taxation, first as corporate income tax and then as personal income tax to stockholders who receive any cash dividends.

Investors(Owners) and creditors of businesses are two groups who need accounting information.

Accounting provides financial information about a business to both internal and external users.

The recording process becomes less efficient if accounting software is used.

Debit and credit can be interpreted to mean increase and decrease, respectively.

The cash basis of accounting does not conform with generally accepted accounting principles.

The time period assumption is often referred to as the matching principle.

The dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

Using a perpetual inventory system, the detailed records of the cost of each purchase and sale are continuously updated.

Transactions that affect inventories effect both the balance sheet and the income statement.

The more inventory a company has on hand, the greater the company's profit.

The standards and rules that are recognized as a general guide for financial reporting are called generally accepted accounting principles (GAAP).

Posting is the process of adding a column of figures.

A sole proprietorship is an economic entity which is not a separate legal entity.