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22 Cards in this Set
- Front
- Back
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Explain the Time Period Principle
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Time Period Principle States That Accounting Activities Can be Divided Into Time Periods
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Explain Annual and Interim Financial Statements
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Annual Statements Cover a 1 Year Period, Interim Statements Cover Shorter Periods of Time
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What is a Fiscal Year?
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Any 12 Consecutive Months
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What Companies Choose a Natural Business Cycle End and When it End?
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Companies that have Seasonal Variations May Choose a Natural Business Cycle and it Ends at the Lowest Point of Activity During Their Cycle
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What is Accrual Basis Accounting?
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Accrual Accounting Records Revenues When Earned and Expenses When Incurred Regardless of Whether or Not Money has been Exchanged
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State the Matching Principle
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The Matching Principle States that Expenses Will be Matched with the Revenues that Created Them in the Same Accounting Cycle
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When are Accruals Recognized?
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Accruals are Revenue and Expense Transactions that are Recorded Before Money Has Been Exchanged
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What are Deferrals and When are They Recognized?
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Deferrals are Revenue and Expense Transactions that are Recorded After Money Has Been Exchanged
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What are Allocations?
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When Defferals are Spread Over More than One Accounting Periods in Equal Amounts, They are Called Allocations
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What Accounts Would we Debit and Credit to Accrue Salary Expense?
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Salary Expense - Debit
Salary Payable - Credit To Accrue Salary Expense. |
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When we Pay Salary Expense that Was Accrued in the Last Cycle, What Accounts Will We Debit and Credit?
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Salary Payable - Debit
Salary Expense Debit Cash - Credit To record salary expense including accrued salary expense. |
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Towards the End of the Year we Enter into a Contract to Perform Services. What is the Journal Entry to Accrue Revenue?
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Accounts Recievable - Debit Service Revenue - Credit
To record accrued revenue. |
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Give Journal Entry to Record Receipt of Revenue that was Accrued in the Last Cycle
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Cash - Debit
Accounts Receivable - Credit Revenue - Credit To record cash receipt of accrued asset and revenue earned. |
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Record a Journal Entry for $100 of Prepaid Insurance that has Expired at the End of the Accounting Period
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Insurance Expns $ 100-Debit
Prepaid Insurance $100 -Credit To record expired prepaid insurance. |
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If the Cost of a Plant Asset- Equipment is $375 Per Month, What is the Journal Entry to Record 1 Months Depreciation?
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Depr. Expense $375-Debit
Accum. Dep.-Equp $375-Credit To record monthly equip. depreciation. |
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What is Depreciation?
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The Process of Allocating the Cost of Plant Assets Over their Expected Useful Life
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We Purchase Equipment for $26,000. The Equipment's Expected Useful Life is 4 Years and Will be Worth $8,000 at that Time. Using Straight-Line Depr. What Would be the Monthly Cost of the Asset?
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$26,000 Cost - $8,000 Net Worth = $18,000 Net Cost
$18,000Net Cost/36 Months = $375 |
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What Kind of Account is Accumulated Depreciation?
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A Contra Asset Account to a Plant Asset
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What are Contra Accounts?
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The have an Opposite Normal Balance of their Master Account. The Highlight the True Value of the Master Account
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How do You Find Book Value?
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Cost of Asset - Accumulated Depriciation
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Once we have Created our Adjusted Trial Balance, What Info Moves from here to Which Financial Reports?
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Revenue and Expenses Move to the Income Statement
Withdrawals Moves to the Statement of Owner's Equity Assets and Liabilities Move to the Balance Sheet |
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What is the Formual for Profit Margin and What Does it Tell us about Operations?
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Profit Margin = Net Income/Net Sales
It give a % of Profit for each $ of Sales. It Measures a Company's Operating Results, it Shows Return on Sales |
