Flashcards in Chapter 4: Study Guide Material Deck (14):
Discuss adjusting journal entries?
are required journal entry at the end of the period to properly reflect the transactions that may cover more than 1 period
What is revenue recognition?
requires that revenues are recorded when earned
What is Expense recognition?
requires expenses to be recognized in the period of revenues (also know as matching concept)
What is cash after occurrence called?
What is cash before occurrence called?
Time period assumption points?
-passage of time
-cut off dates
What kind of situation do deferrals refer to?
- a situation where cash has already been recorded and the account relates to more than on period
What does deferred revenues equal?
what is depreciation?
is the systematic allocation of the cost of an operational asset over its useful life.
Purpose of closing entries?
1) to transfer net income (or net loss) to retained earnings
2) to establish zero beginning balances in all revenue, expense and dividend accounts
What does the post closing trial balance reflect?
only contains assets, liabilities, and stockholder equity accounts
What kind of asset is accumulated depreciation?
- it is a contra-asset
What doe deferred expense equal?
- it equals asset