Accounting ch3

Define unearned revenue's

Advance receipt of future revenues and are recorded as liabilities when cash is received

Depreciation

All assets except for land lose their usefulness

Adjusting process

Analyzing and updating an account at the end of a period before the financial statements are prepared

Accrued expenses

Are unrecorded expenses that have been incurred and no cash has been yet paid

Define depreciation expense

As a fixed asset depreciates, a portion of its cost should be recorded as an expense

Accruals

Cash receipt for accrued revenues are normally received in the next accounting period.

Accumulated depreciation accounts are also called

Contra accounts, And it is a - +account

Fixed assets

Our physical resources that are owned and used by a business and our permanent or have a long life

Four types of account that require adjusting

Prepaid expense, unearned revenue's, accrued revenues, accrued expenses.

What is referred to as deferrals

Prepaid expenses and unearned revenue's. Because the recording of the related expense or revenue is deferred to a future.

Revenue under accrual

Revenue are recorded when service is preformed or product is delivered

Accounting period concept

Revenues and expenses are reported in proper period

Cash basis

Revenues and expenses are reported on the income statement in the period in which cash is received or paid

Accrual basis

Revenues are reported on the income statement in the period in which they are earned

matching concept

Supports reporting revenues and related expenses in the same.

Define prepaid expenses

The advance payment of future expenses and are recorded as assets when cash is paid

Define book value

The up-to-date value of an asset. Cost of the asset -accumulated depreciation Of the asset

Accrued revenue's

Unrecorded revenues that have been earned but no cash has been received

Adjusted trial balance

Verifies The quality of the total debit and credit balances before the financial statements are prepared