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Chapter 5
Adjusting Entries and the Work Sheet
| Term | Definition |
|---|---|
| adjusting entries | journal entries made at the end of an accounting period to reflect changes in account balances that are not the direct result of an exchange with an outside party |
| revenue recognition principle | revenues should be recognized when earned, regardless of when cash is received from the customer. revenues are considered earned when a service has been provided or a product has been sold. |
| expense recognition principle | Expenses should be recognized when incurred, regardless of cash is paid. Expenses are generally considered to be incurred when services are received or assets consumed. |
| matching principle | The proper matching of revenues earned during an accounting period with the expenses incurred to produce the revenues is often referred to as the matching principle. |
| fiscal year | a 12-month period for which financial reports are prepared. |
| historical cost principle | a principle that requires many assets to be recorded at their actual cost |
Created by:
msilvan2006
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