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18 Cards in this Set
- Front
- Back
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Cash basis accounting |
Accounting method that records revenues only when cash is received and expenses only when cash is paid. It is not allowed under GAAP |
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Accrual basis accounting |
Accounting method that records revenues when earned and expenses when incurred. |
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Time period concept |
Assumes that a business' activities can be sliced into small time segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year. |
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Fiscal year |
The 12 month accounting period used for the annual financial statements. |
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Revenue recognition principle |
Requires companies to record revenue when (or as) the entity satisfies each performance obligation. |
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Which expenses are deferred expenses? |
Prepaid expenses, office supplies, depreciation |
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Which revenues are deferred revenues? |
Unearned revenues |
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Which expenses are accrued expenses? |
Salaries expense, interest expense |
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Periodicity assumption |
The assumption that a company must issue statements monthly, quarterly, yearly measurements of revenue. Net income is an estimate. |
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When is the worksheet prepared? |
It is prepared before preparation is the financial statements. |
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When is an accrual entry made? |
When the item is dated within this period and was not recorded. |
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What is book value? |
The remaining undepreciated value of something. |
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What accounts are used for deferred expenses? |
Debit expense (supplies expense) and credit asset (office supplies).
__________ Expense 1,200 _________ Supplies 1,200 To adjust expenses |
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What accounts are used for deferred revenues? |
Debit liability (unearned revenue) and credit revenue (service revenue).
Unearned Revenue 200 _______ Revenue 200 To adjust revenues |
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What accounts are used for accrued expenses? |
Debit expenses (salaries expense) and credit liability (salaries payable)
______ Expense 1,500 ______ Payable 1,500 To accrue expenses |
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What accounts are used for accrued revenues? |
Acc. Receivable 1,000 _______ Revenue 1,000 To accrue revenues |
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Which revenues are accrued revenues |
Service revenues, Sales revenues |
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What is the transaction for depreciation? |
Deprecation Expense-_______ Accumulated Depreciation |
