revenue has been earned or an expense has been incurred but has not been recorded

accrual basis of accounting

revenues are reported on the income statement in the period in which a service has been performed or product has been delivered

accumulated depreciation

contra asset account credited when recording the depreciation of a fixed asset

adjusted trial balance

trial balance prepared after all adjusting entries have been posted

journal entries that bring the accounts up to date at the end of the accounting period

analysis & updating of accounts at the end of the period before financial statements are prepared

book value of the asset

cost of the asset - accumulated depreciation of the asset

cash basis of accounting

revenues & expenses are reported on the income statement in the period in which cash is received/paid

accumulated depreciation accounts

cash related to a future revenue/expense has been initially recorded as a liability/asset

expense recognition principle

expenses incurred in generating revenue must be reported in the same period as the related revenue

physical resources that are owned and used by a business that have a long life

if cash paid is related to a future expense it is initially recorded as an asset

revenue recognition principle

revenues are recorded when earned

cash received is related to future revenue

comparing each item with a total amount on a financial statement

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Accounting ch.3 voca

Term	Definition
accrual	revenue has been earned or an expense has been incurred but has not been recorded
accrual basis of accounting	revenues are reported on the income statement in the period in which a service has been performed or product has been delivered
accumulated depreciation	contra asset account credited when recording the depreciation of a fixed asset
adjusted trial balance	trial balance prepared after all adjusting entries have been posted
adjusting entries	journal entries that bring the accounts up to date at the end of the accounting period
adjusting process	analysis & updating of accounts at the end of the period before financial statements are prepared
book value of the asset	cost of the asset - accumulated depreciation of the asset
cash basis of accounting	revenues & expenses are reported on the income statement in the period in which cash is received/paid
contra accounts	accumulated depreciation accounts
deferral	cash related to a future revenue/expense has been initially recorded as a liability/asset
depreciation	decrease in usefulness
expense recognition principle	expenses incurred in generating revenue must be reported in the same period as the related revenue
fixed assets	physical resources that are owned and used by a business that have a long life
prepaid expense	if cash paid is related to a future expense it is initially recorded as an asset
revenue recognition principle	revenues are recorded when earned
unearned revenue	cash received is related to future revenue
vertical analysis	comparing each item with a total amount on a financial statement

Created by: hellocookies

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