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Acc-153 Chapter 3 Test


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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
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

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