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11 Cards in this Set
- Front
- Back
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Accrual accounting |
Revenues are reported on income statement WHEN THEY ARE EARNED. (When the revenue is earned, but cash is not received) Also, when expenses are incurred, yet cash has not been paid, |
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Cash accounting |
Opposite of accrual, record during when cash is received. Not when it is earned |
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Prepaid rent |
A current asset, that is an expenditure paid in one accounting period, but not recognized until a later accounting period. Prepaid expenses are initially recorded as assets (because they have future economic benefits) and are expensed when the benefits are realized. |
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Prepaid rent adjusting example |
Prepaid rent- Debit Cash- Credit ------------------- Rent expense- debit Prepaid rent-credit |
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Contra asset |
An asset account where the account balance is a credit balance. Most popular example is accumulated depreciation. |
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Accumulated depreciation |
The amount an assets cost that has been allocated and reported as an expense for the period. (Income statement) |
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Deffered revenue |
Aka unearned revenue. Advance payments a company receives for products or services that are going to occur in a future period. (Liability, balance sheet) |
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Accrued expenses |
An expense that is recognized on the books before it has been paid. CURRENT liability |
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Salaries payable |
Current liability, which reports the amount of salaries earned by employees, but have not been paid |
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Interest payable |
Interest expense that has been incurred, but has not been paid as of the date of the balance sheet |
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Book value |
An assets original cost, minus any depreciation or impairment charges. if you bought a machine for 50,000 and its associated depreciation was 10000 per year, then at the end of the second year, the machine would have a book value of 30000 |
