Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Accounting Ch 3
| Term | Definition |
|---|---|
| accrual basis of accounting | A basis of accounting under which revenues and expenses are reported on the income statement in the period in which they are earned or incurred. |
| cash basis of accounting | A basis of accounting under which revenues and expenses are reported on the income statement in the period in which cash is received or paid. |
| revenue recognition principle | revenues are recorded when earned, which is when the services have been performed or products have been delivered to customers |
| expense recognition principle | the expenses incurred in generating revenue must be reported in the same period as the related revenue |
| matching principle | expenses are matched with the revenue generated during a period by those expenses. |
| adjusting process | An analysis and updating of the accounts when financial statements are prepared. |
| adjusting entries | The journal entries that bring the accounts up to date at the end of the accounting period |
| Accural | A revenue that has been earned or an expense that has been incurred but has not been recorded |
| Revenue accrual | The adjusting entry debits an asset and credits a revenue account |
| Expense accrual | The adjusting entry debits an expense account and credits a related liability account such as accounts payable or wages payable |
| Deferrals | A future revenue or expense initially recorded as a liability or asset |
| Unearned revenue | Cash received is related to future revenue, it is initially recorded as a liability |
| Prepaid Expense | Cash paid is related to future revenue, initially recorded as an asset |
| Fixed/ Plant Assets | Physical resources that are owned and used by a business and are permanent or have a long life; long-term or relatively permanent tangible assets such as equipment, machinery, buildings, and land that are used in normal business operations. |
| depreciation | The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life. |
| Depreciate | To lose value or usefulness over time |
| depreciation expense | The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life. |
| Accumulated depreciation | The contra asset account credited when recording the depreciation of a fixed asset |
| contra accounts | An account offset against another account |
| fixed asset accounts | 1. land 2. buildings 3. store equipment 4. office equipment |
| Contra asset account | 1. accumulated depreciation - buildings, store equipment, office equipment |
| book value of the asset | The difference between the cost of a fixed asset and its accumulated depreciation |
| adjusted trial balance | The trial balance prepared after all the adjusting entries have been posted. |
Created by:
Kenleybagby
Popular Accounting sets