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24 Cards in this Set
- Front
- Back
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When are expenses for advertising recognized? |
In the period The ads are provided |
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Under what system of accounting do we record revenue and expense transactions at the time the earnings related activities occur? |
The accrual – basis accounting method |
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What type of accounting is not part of generally excepted accounting principles? |
Cash – basis accounting |
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What recording practices are used when using the cash – basis accounting method? |
Revenues are recorded at the time cash is received and expenses recorded at the time the company pays cash. |
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Why is the cash – basis accounting method not used? |
Because the cash – basis accounting violates both the revenue recognition principle and the matching principle |
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What principal is being demonstrated wherein he revenues are recorded when they are earned rather then when the cash is received? |
The revenue recognition principle |
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How do you accounts get brought up to date? |
By adjusting entries |
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What are the two broad categories that adjusting entries fall into? |
Pre-payments and accruals |
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What are the two broad categories that adjusting entries fall into? |
Pre-payments and accruals |
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What are the two subcagories are pre-payments? |
Prepaid expenses and unearned revenues |
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What are the two broad categories that adjusting entries fall into? |
Pre-payments and accruals |
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What are the two so categories are pre-payments? |
Prepaid expenses and unearned revenues |
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Where are the two subcategories of accruals? |
Accrued expenses and accrued revenues |
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What does the adjusting entry always include for a prepaid expense? |
A debit to an expense account and a credit to an asset account |
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What kind of expense creates future benefits so they are recorded as assets at time of purchase? |
Prepaid expenses |
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Blank is the process of allocating the cost of an asset such as equipment to expense, its cost recorded as an estimate based on expected useful life and it's allocation of the cost over that life. |
Depreciation |
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Blank is an account with a balance that is opposite to that of it's related accounts. |
A Contra account |
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What does the adjusting entry for an unearned revenue always include? |
It includes a debit to a liability account and a credit to a revenue account. |
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What is another common name for unearned revenue? |
Deferred revenue |
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Blank occur when the cash flow occurs after either the expenses were incurred or the revenue is earned. |
Accruals |
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What account is never included in the adjusting entries? |
The cash account, only T accounts will be adjusted to update account balances |
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A blank is a list of all accounts and their balances at a particular date after the accounts of been updated with adjusting entries. |
Adjusted trial balance |
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What do closing entries do? |
Transfer the balances of all temporary accounts to the balance of the retained earnings account these include revenues and expenses and dividends. |
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What debits and credits need to happen to move the revenue accounts to retained earnings? |
All expense and dividend accounts need to be credited and the retained earnings account debited. All revenues will be credited |
