chapter 3 summary cheat sheet Flashcards
(31 cards)
prepaid expenses
assets paid for in advance of receiving their benefits.
when assets are used the advanced payments become _______
expenses
accumulated depreciation
a seperate contra account.
a contra account is linked with
another account
a contra account has an opposite what
normal balance and its subtraction from that other account balance
unearned revenue
cash received in advance of providing products and services. when cash is accepted the compnay has liability to provide products services
accrued expenses
costs incurred in a period that is both unpaid and unrecorded.
accrued interest formula
principle amount owed x annual interest rate x fraction of year since last payment
accrued revenues
revenues earned in a period rhat are both unrecorded and not yet received in cash
unadjusted trial balance
a list of ledger accounts and balances before adjustments are recorded
adjusted trial nalace
a lits of accounts and balances after adjusting entries have been recorded and posted to ledger
closing process
occurs at period end after financial statements have been prepared. resets revenue, expense, and dividends balances to zero
temporary accounts
closed at oeriod end. they consist of revemue, expese, dividends, and income summary
permanent accounts
not closed at period end. consist of asset, laibilty, common stock and retained earnings
income summar
a temporary account only used for the closing process that has a credit for total revenues and a debit for total expenses
classified balance sheet
orgaizes asset and libailities into meaningful subgroups
current vs long ter, classificiation
current items are to be collected or owed within one yeat. long term items are expencted after one year
current assets
assets to be sold, collected or used in oneyear.
example of current asset
cash
long term investments
assets to be held for more than one year
example of long term investments
notes receivable
plant assets
tangible assets used to produce or sell products and services
example of plant assets
equipment
intagible assets
long term assets that lack physical form
