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Flashcards in CH3 - The Adjusting Process Deck (20):
1

The accounting concept that assumes that the economic life of the business can be divided into time periods.

accounting period concept

2

Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which they are earned or incurred.

accrual basis of accounting

3

Expenses that have been incurred but not recorded in the accounts.

accrued expenses

4

Revenues that have been earned but not recorded in the accounts.

accrued revenues

5

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

Accumulated Depreciation

6

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

adjusted trial balance

7

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

adjusting entries

8

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

adjusting process

9

The difference between the cost of a fixed asset and its accumulated depreciation

book value of the asset (or net book value)

10

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

cash basis of accounting

11

An account offset against another account.

contra accounts (or contra asset accounts)

12

To lose usefulness as all fixed assets except land do.

depreciate

13

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

depreciation

14

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

depreciation expense

15

Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.

fixed assets (or plant assets)

16

A concept of accounting in which expenses are matched with the revenue generated during a period by those expenses.

matching concept (or matching principle)

17

Items such as supplies that will be used in the business in the future.

prepaid expenses

18

The accounting concept that supports reporting revenues when the services are provided to customers.

revenue recognition concept

19

The liability created by receiving revenue in advance.

unearned revenues

20

An analysis that compares each item in a current statement with a total amount within the same statement.

vertical analysis