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20 Cards in this Set
- Front
- Back
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Accrual accounting basis |
The recording of transactions that change a company’s financial statements in the periods in which the events occur |
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Accrual |
Adjusting entries for either accrued revenues or accrued expenses |
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Accrued Expenses |
Expenses incurred but not yet paid in cash or recorded |
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Accrued revenues |
Revenues for services performed but not yet received in cash or recorded |
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Adjusted trial balance |
A list of accounts and their balances after the company has made all adjustments |
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Adjusting entries |
Entries made at the end of an accounting period to ensure that companies follow the revenue recognition and expenses recognition principles |
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Book value |
Difference the cost of a depreciable asset and it’s related accumulated depreciation |
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Calendar year |
Accounting period that extends from January 1st to December 31st |
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Cash basis accounting |
Accounting basis where companies record revenue when they receive cash n an expense when they pay cash |
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Contra asset account |
An account offset against an asset account on the balance sheet |
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Deferrals |
Adjusting entries for either prepaid expenses or unearned revenues |
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Depreciation |
The process of allocating the cost of an asset to expense over its useful life |
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Expense recognition principle -Matching principle - |
The principle that companies match efforts (expense) with accomplishments (revenues) |
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Fiscal year |
An accounting period that is one year in length |
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Interim periods |
Monthly or quarterly accounting time periods |
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Prepaid expense (prepayments) |
Expenses paid in cash before they are used or consumed |
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Revenue recognition principle |
The principle that companies recognize revenue in the accounting period which the recording obligation is satisfied |
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Time period assumption |
Assumptions that accountants can divide the economic life of a business into artificial time periods |
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Unearned revenues |
A liability recorded for cash received before services are performed |
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Useful life |
The length of service of a lung-lived asset |
