Accounting Chapter 3

  1. Adusting Entries
    Made at the end of an accounting period to reflect a transaction or event that is not yet recorded.

    Adjusting entries are necessary for each of these so that revenues, expenses, assets, and liabilities are correctly reported.
  2. Contra Accounts
    An account linked with another account, it has an opposite normal balance, and it is reported as a subtraction from that other account’s balance.
  3. Depreciation Expense
    The process of allocating the costs of these assets over their expected useful lives.
  4. Accumulated Depreciation
    The cumulative depreciation of an asset up to a single point in its life.
  5. Need adjustment entries
    Prepaid Expenses, Unearned (Deferred) revenue, Accrued expenses, and Accrued Revenue.
  6. Book Value
    The net amount, which equals the asset’s costs less its accumulated depreciation.
Card Set
Accounting Chapter 3