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40 Cards in this Set
- Front
- Back
principle saying that assets should be recorded at their cost
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cost principle
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b/s accounts whose balances are carried forward to the next accounting period
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permanent accounts
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resources owned by a business
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assets
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average time required to go from cash to cash in producing revenues
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operating cycle
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system that identifies, records, and communicates the economic events of an organization to interested users
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accounting
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resources not expected to be realized in cash within the next year or operating cycle
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long-term investments
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noncurrent resources that do not have physical substance
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intangible assets
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obligations reasonably expected to be paid from existing current assets or through the creation of other current liabilities within the next year or operating cycle
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current liabilities
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entries to correct errors made in recording transactions
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correcting entries
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b/s that contains a number of standard classifications or sections
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classified balance sheet
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obligations expected to be paid after one year
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long-term liabilities
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ability of a company to pay obligations that are expected to become due within the next year or operating cycle
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liquidity
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expenses incurred but not yet paid in cash or recorded
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accrued expenses
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revenues earned but not yet received in cash or recorded
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accrued revenues
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list of accounts and their balances after all adjustments have been made
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adjusted trial balance
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entries made at the end of an accounting period to ensure that the revenue recognition and matching principles are followed
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adjusting entries
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difference between cost of depreciable asset and its related accumulated depreciation
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book value
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ccting period that exteds from jan 1 to dec 31
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calendar year
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accting basis in which revenue is recorded when cash is received and an expense is recorded when cash is paid
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cash basis accting
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acct that is offset against an asset acct on the balance sheet
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contra asset acct.
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allocation of the cost of an asset to expense over its useful life in a rational and systematic manner
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depreciation
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accting period that is one year in length
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fiscal year
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expenses paid in cash and recorded as assets before they are used or consumed
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prepaid expenses
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length of service of a productive facility
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useful life
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monthly or quarterly accounting time periods
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interim periods
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cash received and recorded as liabilities before revenue is earned
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unearned revenues
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temp acct used in closing revenue and expense accts
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income summary
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financial statement that reports the assets, liabilities, and stockholder's equity at a specific date
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b/s
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list of perm. accts and their balances after closing entries have been journalized and posted
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post-closing trial balance
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assets=liabilities+s/e
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basic accting exn
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assets of a relatively perm. nature that are being used in the business and not intended for sale. (fixed)
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property, plant, and equipment
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part of accting that involves only the recording of economic events
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bookkeeping
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revenue, expense, and dividends accts whose balances are transferred to retained earnings at the end of an accting period
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temporary accts.
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business organized as a separate legal entity under state corporation law having ownership divided into transferable shares of stock
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corporation
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distribution by a corporation to its stockholders on a pro rata basis
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dividend
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assumption that requires activities of the entity be kept separate and distinct from the activities of its owners and all other economic entities
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economic entity assumption
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standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair.
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ethics
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cash and other resources that are reasonably expected to be realized in cash or sold or consumed withing one year or the operating cycle
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current assets
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accouting basis in which transactions that change a company's financial statements are recorded in the periods in which the events occur
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accrual basis accting
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entries made at the end of an accting period to transfer the balances of temporary accts to a permanent s/e equity acct, r/e
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closing entries
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