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21 Cards in this Set

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Accounting period concept
The accounting concept that divides economic life of the business in two time periods and requires that revenues and expenses be reported in the proper period
Accural basis of accounting
revenues and expenses are reported in the income statement in the period in which they are earned or incurred
Revenue recognition concept
Supports reporting revenues when the services are provided to customers
Matching concept (matching principle)
Expenses are matched with the revenue generated during a period by those expenses
Cash basis accounting
Revenues and expenses are reported on the income statement in the period in which the cash is received or paid
Prepaid expenses
Advance payment of future expenses and are recorded as assets when the cash is paid
Supplies, prepaid advertising, prepaid interest
Unearned revenues
Advance receipt of future revenues and are recorded as liabilities when the cash is received . Anything received but not yet earned
Tuition received in advance by a school, annual retreat trainer fee received from an attorney, premiums received in advance by the insurance company, magazine subscriptions received in advance by a publisher .
accrued revenues
Unrecorded revenues that have been earned and for which the cash has yet to be received
Fees for services that an attorney or doctor has provided but not yet billed are this
accured expenses
unrecorded expenses that have been incurres and for which cash has yet to be paid
Wages owed to employees at the end of a period but not yet paid are this also interest on notes payable and taxes
Deferrals
Prepaid expenses and unearned revenues are sometimes referred to this because the recording of the related expense or revenue is to a future period
Accurals
Accured revenues and accured expenses are referred to this because the related revenue expense should be recorded in the current period
Fixed assets or plant assets
Physical resources that are owned and used by a business and are permanent or have a long life . They are long-term prepaid expenses
Land, buildings, equipment
Depreciation
Usefulness is decreased as time passes
Equipment loses ability to provide useful services
depreciate
All fixed assets except land lose their usefulness . A portion of its cost should be recorded as an expense
Depreciation expense
Portion of fixed assets cost recorded as an expense periodically
Accumulated depreciation
Contra asset account that is credited when recording the depreciation of a fixed asset. Original cost of fixed asset and depreciation recorded since its purchase are reported on the balance sheet
Contra asset credited
Contra accounts or contract asset account
An account offset against another account
Accumulated depreciation
. Book value of the asset ( net book value)
Difference between cost of a fixed asset and its accumulated depreciation
Allocation method
Depreciation Market value of a fixed asset differs from its book value . Cost of a fixed asset depreciates to expense over its estimated life
adjusted trial balance
The trial balance repaired after all just hang in trees have been posted
Vertical analysis
Comparing each item in a financial statement with a total amount from the same statement to analyse relationships within the financial statement
Each asset item is stated as a percent of the total asset