Acc-153 Chapter 3 Test
Terms
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- Accrual-basis accounting
- Accounting basis in which transactions that change a company's finnancial statements are recorded in the periods in which the events occur
- Accrued expenses
- Expenses incurred but not yet paid in cash or recorded
- Accrued revenues
- REvenues earned but not yet received in cash or recorded
- Adjusted trial balance
- A list of accounts and their balances after all adjustments have been made
- Adjusting entries
- Entries made at the end of an accounting period to ensure that the revenue recognition and matching principles are followed
- Book value
- The difference between the cost of a depreciable asset and its related accumulated depreciation
- Calendar year
- An accounting period that extends from January 1 to December 31
- Cash-basis accounting
- Accounting basis in which revenue is recorded when cash is received and an expense is recorded when cash is paid
- Contra-asset account
- An account that is offset against an asset account on the balance sheet
- Depreciation
- The allocation of the cost of an asset to expense over its useful life in a rational and systematic manner
- Fiscal Year
- An accounting period that is one year in length
- Interim Periods
- Monthy or quarterly accounting time periods
- Matching principle
- The principle that efforts (expenses) be matched with accomplishments (revenues)
- Revenue recognition principle
- The principle that revenue be recognized in the accounting period in which it is earned
- Time period assumption
- An assumption that the economic life of a business can be divided into artificial time periods
- Prepaid expenses
- Expenses paid in cash and recorded as assets before they are used or consumed
- Unearned revenues
- Cash received and recorded as liabilities before revenue is earned
- Useful Life
- The length of service of a productive facility