Chapter 3

Front 1

Cash Basis

Back 1

Revenue and exspenses are reported in the income statement in the period in which it was paid.

Front 2

Accrual basis

Back 2

revenues reported in the income statement when the service are provided to customer.

Front 3

The Matching Concept

Back 3

supports reporting revenues and related exspenses in the same period.

Front 4

Adjsuting Entries

Back 4

Journal entries that brings the account up to date at the end of the period.

Front 5

Deferrals

Back 5

are created by recording a transaction in a way that delays or defers recognition of an expense or or revenues.

Front 6

Deferred expenses or prepaid expenses

Back 6

are items that have initially recorded as assets but are expected to become expenses over time through normal operation of biz. e.g: Supplies, prepaid ins

Front 7

Deffered revenues or unearned revenues

Back 7

are items that have been initially recorded as liabilities but are expected to become revenues over time.e.g unearned rent, tuition received in advance by school,annual attorney fees,magazines received in advance by publisher.

Front 8

Accurals

Back 8

are created by an unrecorded expense that has been incurred or an inrecorded revenue that has been earned.

Front 9

Accrued expenses or accrued liability

Back 9

are exspenses that have been incurred but have not been recorded in the accounts. E.g accrued wages owed to employees at the end of the period, accrued interest on notes payable, and accrued taxes

Front 10

Accrued revenues or accrued assets

Back 10

are revenues that have been earned but but have not been recorded in accounts. e.g provided services but has not yet been billed, interest on note receivable, accrued rent on property rented to others.