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