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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Accrual: revenue

Recognition of revenue earned but not received

1

Accrual: expense

Recognition of expense incurred but not paid

2

Accrual

Accrual basis recognition proceeds (leads to) cash
receipt/expenditure

3

Deferral

Cash receipt/expenditure proceeds (leads to) accrual basis
Recognition

4

Deferral: revenue

Postponement of recognition of revenue

Cash is received but revenue is not earned

5

Deferral: expense

Postponement of recognition of expense

Cash is paid, but expense is not incurred

6

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

Liability or asset accounts

7

Two methods are possible for deferring revenues and expenses
Depending on whether...

Real or nominal accounts are originally used to record the
Cash transaction

8

Entries are reversed for book keeping...

Expediency

9

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

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

Associated nominal account

2) apportioned between a nominal and real account

10

2 book keeping methods for deferrals of expense

1 expense method

2 asset method

11

2 book keeping methods for deferrals of revenue

1 revenue method

2 liability method

12

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

To convert cash basis accounting records to accrual basis

13

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

1 current balance

2 correct balance

14

Current balance

Cash basis amount In a given account

15

Correct balance

Accrual basis amount in a given Account

16

Journal entries must adjust account balances from current amounts to...

Correct amounts

17

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...

Income statement account

18

When adjusting accounts receivable the related account is...

Sales

19

When adjusting accounts payable the related account is...

Purchases

20

When adjusting prepaid rent the related account is...

Rent expense