Flashcards in Chapter 3 Vocabulary Deck (20):
accounting period concept
The accounting concept that assumes that the economic life of the business can be divided into time periods.
accrual basis of accounting
Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which they are earned or incurred.
Expenses that have been incurred but not recorded in the accounts.
Revenues that have been earned but not recorded in the accounts.
The contra asset account credited when recording the depreciation of a fixed asset.
adjusted trial balance
The trial balance prepared after all the adjusting entries have been posted.
The journal entries that bring the accounts up to date at the end of the accounting period.
An analysis and updating of the accounts when financial statements are prepared.
book value of the asset
The cost of a fixed asset minus accumulated depreciation on the asset.
cash basis of accounting
Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which cash is received or paid.
A management approach that is part of the overall total quality management philosophy. The approach requires all employees to constantly improve processes of which they are a part or for which they have managerial responsibility.
To lose usefulness as all fixed assets except land do.
The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.
The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.
The number of dollars of sales that are generated from each dollar of average fixed assets during the year, computed by dividing the net sales by the average net fixed assets.
The comprehensive budget plan linking all the individual budgets related to sales, cost of goods sold, operating expenses, projects, capital expenditures, and cash.
Items such as supplies that will be used in the business in the future.
revenue recognition concept
The concept that supports recording revenues when services have been performed or products delivered to customers.
The liability created by receiving revenue in advance.