Module 9A Basic Concepts Part 4 (29-53) Flashcards Preview

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Flashcards in Module 9A Basic Concepts Part 4 (29-53) Deck (21)
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0
Q

Accrual: expense

A

Recognition of expense incurred but not paid

1
Q

Accrual: revenue

A

Recognition of revenue earned but not received

2
Q

Accrual

A

Accrual basis recognition proceeds (leads to) cash

receipt/expenditure

3
Q

Deferral

A

Cash receipt/expenditure proceeds (leads to) accrual basis

Recognition

4
Q

Deferral: revenue

A

Postponement of recognition of revenue

Cash is received but revenue is not earned

5
Q

Deferral: expense

A

Postponement of recognition of expense

Cash is paid, but expense is not incurred

6
Q

Deferral postpones recognition of revenue or expense by placing the amount in…

A

Liability or asset accounts

7
Q

Two methods are possible for deferring revenues and expenses

Depending on whether…

A

Real or nominal accounts are originally used to record the

Cash transaction

8
Q

Entries are reversed for book keeping…

A

Expediency

9
Q

If accruals are reversed, the subsequent cash transaction is reflected in the…

2) if accruals are not reversed the subsequent cash transaction must be…

A

Associated nominal account

2) apportioned between a nominal and real account

10
Q

2 book keeping methods for deferrals of expense

A

1 expense method

2 asset method

11
Q

2 book keeping methods for deferrals of revenue

A

1 revenue method

2 liability method

12
Q

For small companies that use cash basis method an accountant is often called upon to…

A

To convert cash basis accounting records to accrual basis

13
Q

When making journal entries to adjust from the cash basis to the accrual basis, it is important to identify what 2 Types of amounts?

A

1 current balance

2 correct balance

14
Q

Current balance

A

Cash basis amount In a given account

15
Q

Correct balance

A

Accrual basis amount in a given Account

16
Q

Journal entries must adjust account balances from current amounts to…

A

Correct amounts

17
Q

When adjusting a balance sheet account from the cash basis to the accrual basis, the other half of the entry will generally be to the related…

A

Income statement account

18
Q

When adjusting accounts receivable the related account is…

A

Sales

19
Q

When adjusting accounts payable the related account is…

A

Purchases

20
Q

When adjusting prepaid rent the related account is…

A

Rent expense