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14 Cards in this Set
- Front
- Back
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What is a worksheet? |
A columnar device used by accountants to aid them in completing the accounting cycle, often just referred to as "spreadsheet". It is not a formal report. |
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What is the adjusting? |
The process of calculating the latest up-to-date balance of each account at the end of an accounting period. |
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What is historical cost? |
The actual cost of an asset at time of purchase. |
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What is depreciation? |
The allocation (spreading) of the cost of an asset (such as an auto or equipment) over its expected useful life. |
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What is residual value? |
Estimated value of an asset after all the allowable depreciation has been taken. |
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What is accumulated depreciation? |
A contra-asset account that summarizes or accumulates the amount of depreciation that has been taken on an asset |
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The equation to calculate depreciation per year: |
Cost of equipment ➖ Residual value➗ Estimated years of usefulness = Depreciation per year |
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What is book value? |
Cost of equipment less accumulated depreciation. |
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What is accrued salaries payable? |
Salaries that are earned by employees but unpaid and unrecorded during the period (and thus need to be recorded by an adjustment) and will not come due for payment until the next accounting period. |
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What information goes on the worksheet's income statement? |
Revenue and all expenses. |
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What information goes on the worksheet's balance sheet? |
Assets, liabilities, capital, withdrawals, and net income/ net loss. ( Note: this is only on the spreadsheet's balance sheet column) |
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Is the worksheet a formal statement? |
No |
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Why do we make adjustments? |
To update certain accounts so that they will reflect their latest balance before financial statements are prepared. |
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Is the original cost of a piece of equipment adjusted? |
No, the original cost of a piece of equipment is not adjusted; Historical cost is not lost. |
