Tome: Financial Accounting Chapter 4 Vocabulary Directions: For each section, either look up the terms and write out the definitions (in your own words on regular paper) or use the matching. YOU DO NOT HAVE TO DO BOTH! But you can if that will help you learn. Objective 2 Matching: 1. 4. Current assets Current liabilities Fixed assets (plant assets) Long-term liabilities Notes receivable 2. 5. 3. A. A customer's written promise to pay an amount and possibly interest at an agreed-upon rate. B. Cash and other assets that are expected to be converted to cash or sold or used up, usually within one year or less, through the normal operations of the business. C. Liabilities that usually will not be due for more than one year. D. Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets. E. Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time. Objective 3 Matching: 1. * Closing entries Closing process Closing the books 4. 5. 2. Real (permanent) accounts Second closing entry Temporary (nominal) account 3. 6. A. Accounts that report amounts for only one period. B. Term for balance sheet accounts because they are relatively permanent and carried forward from year to year. C. The entries that transfer the balances of the revenue, expense, and drawing accounts to the owner's capital account D. The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period E. The second journal entry of the closing process that transfers the owner's drawing account balance to the owner's capital account. F. The transfer process of converting temporary account balances to zero by transferring the revenue and expense account balances to the owner's capital account, and transferring the owner's drawing account to the owner's capital account