Accounting 1: Chapter 3

  1. Accrual-Basis Accounting
    accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur
  2. Accruals
    adjusting entries for either accrued revenues or accrued expenses
  3. Accrued Expenses
    expenses incurred but not yet paid in cash or recorded
  4. Accrued Revenues
    revenues earned but not yet received in cash or recorded
  5. Adjusted Trial Balance
    a list of accounts and their balances after the company has made all adjustments
  6. Adjusted Entries
    entries made at the end of an accounting period to ensure that companies follow the revenue recoginition and matching principles
  7. Book Value
    the difference between the cost of a depreciable asset and it's related accumulated depreciation
  8. Calendar Year
    an accounting period that extends from January 1 to December 31
  9. Cash-Basis Accounting
    accounting basis in which companies record revenue when they receive cash and an expense when they pay cash
  10. Contra Asset Account
    an account offset against an asset account on the balance sheet
  11. Deferrals
    adjusting entries for either prepaid expenses or unearned revenues
  12. Depreciation
    the allocation of the cost of an asset to expense over it's useful life in a rational and systematic manner
  13. Fiscal Year
    an accounting period that is one year in length
  14. Interim Periods
    monthly or quarterly accounting time periods
  15. Matching Principle
    the principle that companies match efforts (expenses) with accomplishments (revenue)
  16. Prepaid Expenses
    expenses paid in cash that benefit more than one accounting period and that are recorded as assets
  17. Revenue Recognition Principle
    the principle that companies recognize revenue in the accounting period in which it is earned
  18. Time Period Assumption
    an assumption that accountants can divide the economic life of a business into artificial time periods
  19. Unearned Revenues
    cash received and recorded as liabilities before revenue is earned
  20. Useful Life
    the length of service of a productive facility
Card Set
Accounting 1: Chapter 3
Accounting 1: Chapter 3