Cal poly AGB 214 ch 3

Depreciation

The decrease in book value as fixed assets are used I the normal course of business.

Book value of the asset

The difference between the cost of a fixed asset and it's accumulated depreciation.

Adjusting entries

The journal entries that bring the accounts up to date at the end of the accounting period.

Depreciation expense

The portion of the cost of a fixed asset that is recorded as an expense each year of it's useful life.

The --------- account is credited for the amount of depreciation of equipment during the period.

Accumulated depreciation

The -------- trial balance is prepared after all the adjusting entries have been posted.

Adjusted

The --------- account is debited for the amount of prepaid advertising expired during the period

Advertising expense

Adjusting process

An analysis and updating of the accounts before financial statements are prepared.

Fixed assets

Assets owned and used by a business and that have a long life and are relatively expensive. Also known as property, plants, and equipment.

The -------- account is debited for the amount of depreciation. On the equipment during the period.

Depreciation expense

Accrual expenses

Expenses that have been incurred but not paid. Accounts payable is an example.

Prepaid expenses

Items that have been initially recorded as assists but are expected to become expenses over time as they are used.

Unearned revenue

Items that have been initially recorded as liabilities when cash is received but are expected to become revenue over time as work is completed

If the adjusting entry to record depreciation expenses on equipment is omitted, the net income for the period will be ----------?

Overstated

The --------- account is credited for the amount of prepaid rent that has expired during the period.

Prepaid rent

Accured revenue

Revenue that have been earned but payment not collected. Accounts receivable is an example.

Match concept

The accounting concept that supports recording revenues and the related expenses in the same period.

Accumulated depreciation

The contra asset account credited when recording the depreciation of a fixed asset.

Adjusting trial balance

The trial balance prepared after all the adjusting entries have been posted.

Cash basis

Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which the cash is received or paid.

Accrual basis

Under this basis of accounting, revenues are reported in the income statement I'm the period in which they are earned.

Both sides of the balance sheet will be -------- if the adjusting entry to record Accured interest revenue is omitted??

Understated

The ------- accounts is debited for the amount of unearned fees that have been earned during the period.

Unearned fees

The --------- account is credited for the wages due at the end of the period.

Wages payable