Chapter 3 Acct 201

Front 1

Cash- Basis

Back 1

Records Transactions only when cash is received or paid.
used by very small businesses

Front 2

Accrual

Back 2

Records Transaction when they occur.sale is made, bill is received. Complies with GAAP

Front 3

Accual Accounting

Back 3

records both cash and non-cash transactions.

Front 4

Type of Cash transactions

Back 4

Collecting from customers, Paying for expenses, Borrowing money, Issuing stock

Front 5

Types of non-cash transactions

Back 5

Sales on account, purchases on accounts, and using prepaid expenses, such as supplies

Front 6

Revenue Principle

Back 6

When to record is after revenue is earned.
What to record is cash value of goods sold or services provided

Front 7

Adjustment Process

Back 7

at the end of a period, financial statements are prepared. this ensures that revenue earned is recorded, expenses incurred are matched to revenues, and asset and liability accounts are up to date

Front 8

Deferrals (prepaids)- expenses

Back 8

Cash has been paid, but the related expense is not yet recorded

Front 9

Depreciation Expense

Back 9

Debit

Front 10

Accumulated Depreciation

Back 10

Credit, acount that shows the sum of a depreciation expense of a long-term asset.

Front 11

Contra Asset

Back 11

part of accumulated depreciation, always has a companion account, normal credit balance

Front 12

Temporary Account

Back 12

Revenues and expenses
closed or zeroed. Balances represent a period of time and are not carried.

Front 13

Permanent Account

Back 13

Asset, liability, and equity accounts.
Not closed or zeroed, ending balance of one period carries over to the following period

Front 14

Closing entries for revenue

Back 14

Debit each revenue account for its credit balance. Retained earnings is credited

Front 15

Closing Entries for expense

Back 15

Credit each expense account for its debit balance. retained earning is debited