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Flashcards in Chapter 3 Deck (20):
1

Accounting method that records revenue only when cash is received and expenses only when cash is paid

Cash Basis Accounting

2

Accounting method that records revenues when earned and expenses when incurred

Accrual Basis Accounting

3

Assumes that a business' activities can be sliced into small time segments and that financial statements can be prepared for specific periods

Time Period Concept

4

An accounting year of any 12 consecutive months that do not necessarily coincide with the calender year

Fiscal Year

5

Requires companies to record revenue when it has been earned and determines the amount of revenue to record

Revenue Recognition Principle

6

Ensures that all expenses are recorded when they are incurred during the period and matches those expenses against the revenues of the period

Matching Principle

7

Entry made at the end of the accounting period that is used to record revenues to the period which they are earned and expenses to the period they occur

Adjusting Entry

8

Long-Lived, tangible asset used in the operation of a business

Plant Asset

9

Examples of Plant Assets

Land, buildings, and equipment

10

Process where businesses spread the allocation of a plant asset's cost over its useful life

Depreciation

11

Expected value of a depreciable asset at the end of its useful life

Residual Value

12

Depreciation method hat allocates an equal amount of depreciation each year

Straight-Line Method

13

Sum of all the depreciation expense recorded to date for a depreciable asset

Accumulated Depreciation

14

Account that us paired with its related account in the chart of accounts and associated financial statement

Contra Account

15

Depreciable asset's cost minus accumulated depreciation

Book Value

16

Liability created when a business collects cash from customers in advance of completing a service

Deferred Revenue

17

Expense that the business has incurred but has not yet paid

Accrued Expense

18

Revenue that has been earned but the cash has not yet been collected

Accrued Revenue

19

List of all the accounts with their adjusted balance

Adjusted Trail Balance

20

An internal document that helps summarize data for the preparation of financial statements

Worksheet