Unit 2: Month-End Wizard

Debits and Credits

The two sides of every journal entry. Debits increase assets and expenses; credits increase liabilities, equity, and revenue.

Journal Entry

A record of a business transaction showing which accounts are debited and credited and by what amounts.

Ledger

A complete record of all financial transactions organized by account, used to prepare financial statements.

Revenue

Money earned from selling goods or services before any expenses are subtracted.

Expenses

Costs incurred in the process of earning revenue, such as rent, wages, or supplies.

SUMIF

An Excel function that adds cells meeting a single criterion, such as summing all debits for a specific account.

XLOOKUP

An Excel function that searches a range for a value and returns a corresponding result from another range, replacing VLOOKUP.

IFERROR

An Excel function that returns a custom result when a formula produces an error, such as showing 'Not Found' instead of #N/A.

Accruals

Revenues earned or expenses incurred that have not yet been recorded in cash, such as wages earned but not yet paid.

Deferrals

Cash received or paid before the related revenue is earned or expense is incurred, such as prepaid insurance.

Adjusting Entries

Journal entries made at the end of an accounting period to update accounts for accruals, deferrals, and depreciation.

Closing Entries

Journal entries that transfer temporary account balances (revenue, expenses, dividends) to retained earnings, resetting them to zero for the next period.

Temporary Accounts

Accounts that track activity for one accounting period and are closed to zero at period end, such as revenue and expense accounts.

Permanent Accounts

Accounts whose balances carry forward to the next period, such as assets, liabilities, and equity.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in the United States.

Depreciation

The systematic allocation of a fixed asset's cost over its useful life, reflecting wear and tear or obsolescence.

Straight-Line Depreciation

A depreciation method that allocates equal expense each period: (Cost − Salvage Value) ÷ Useful Life.

Prepaid Expenses

Payments made in advance for goods or services to be received in the future, recorded as an asset until used.

Unearned Revenue

Cash received before services are performed or goods are delivered; recorded as a liability until earned.

Accumulated Depreciation

The total depreciation expense recorded for an asset since it was acquired; a contra-asset account that reduces book value.

Named Ranges

A descriptive name assigned to a cell or range of cells in Excel, making formulas easier to read and maintain.

Macros

A recorded sequence of Excel actions that can be replayed to automate repetitive tasks.

VBA

Visual Basic for Applications; a programming language built into Excel used to write custom automation and user forms.

SWITCH Function

An Excel function that compares a value against a list of possible results and returns the corresponding match.

IFS Function

An Excel function that tests multiple conditions and returns the value for the first true condition.

Net Income

The profit remaining after all expenses are subtracted from revenue; also called the bottom line.

Retained Earnings

The cumulative net income kept in the business after dividends are paid; links the income statement to the balance sheet.

Matching Principle

The accounting rule that expenses should be recorded in the same period as the revenues they helped generate.

Audit

An independent examination of financial records and systems to verify accuracy and compliance with standards.

Excel Table

A structured range of data in Excel with named columns, auto-expanding formulas, and built-in formatting.

SUMPRODUCT

An Excel function that multiplies corresponding values in arrays and returns the sum of those products.

Accounting Period

A defined span of time for which financial records are kept and reports are prepared, such as a month, quarter, or year.

SUMIFS

An Excel function that adds cells meeting multiple criteria, such as summing expenses for a specific department and month.