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21 Cards in this Set
- Front
- Back
- 3rd side (hint)
Accounting period concept
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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
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Accural basis of accounting
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revenues and expenses are reported in the income statement in the period in which they are earned or incurred
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Revenue recognition concept
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Supports reporting revenues when the services are provided to customers
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Matching concept (matching principle)
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Expenses are matched with the revenue generated during a period by those expenses
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Cash basis accounting
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Revenues and expenses are reported on the income statement in the period in which the cash is received or paid
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Prepaid expenses
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Advance payment of future expenses and are recorded as assets when the cash is paid
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Supplies, prepaid advertising, prepaid interest
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Unearned revenues
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Advance receipt of future revenues and are recorded as liabilities when the cash is received . Anything received but not yet earned
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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 .
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accrued revenues
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Unrecorded revenues that have been earned and for which the cash has yet to be received
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Fees for services that an attorney or doctor has provided but not yet billed are this
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accured expenses
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unrecorded expenses that have been incurres and for which cash has yet to be paid
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Wages owed to employees at the end of a period but not yet paid are this also interest on notes payable and taxes
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Deferrals
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Prepaid expenses and unearned revenues are sometimes referred to this because the recording of the related expense or revenue is to a future period
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Accurals
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Accured revenues and accured expenses are referred to this because the related revenue expense should be recorded in the current period
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Fixed assets or plant assets
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Physical resources that are owned and used by a business and are permanent or have a long life . They are long-term prepaid expenses
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Land, buildings, equipment
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Depreciation
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Usefulness is decreased as time passes
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Equipment loses ability to provide useful services
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depreciate
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All fixed assets except land lose their usefulness . A portion of its cost should be recorded as an expense
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Depreciation expense
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Portion of fixed assets cost recorded as an expense periodically
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Accumulated depreciation
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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
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Contra asset credited
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Contra accounts or contract asset account
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An account offset against another account
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Accumulated depreciation
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. Book value of the asset ( net book value)
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Difference between cost of a fixed asset and its accumulated depreciation
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Allocation method
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Depreciation Market value of a fixed asset differs from its book value . Cost of a fixed asset depreciates to expense over its estimated life
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adjusted trial balance
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The trial balance repaired after all just hang in trees have been posted
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Vertical analysis
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Comparing each item in a financial statement with a total amount from the same statement to analyse relationships within the financial statement
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Each asset item is stated as a percent of the total asset
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