Slim C: Accrual Accounting Flashcards Preview

Financial Accounting Part 1 > Slim C: Accrual Accounting > Flashcards

Flashcards in Slim C: Accrual Accounting Deck (12)
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1
Q

Accrual accounting

A

Records business transactions as they occur, not when cash receipts or payments occur

2
Q

Cash accounting

A

Records cash transactions only

3
Q

Time-period concept

A

Makes sure that accounting info is reported regularly by companies. IAS1 - requires financial reports once a year

4
Q

Matching principle

A

Forms basis for recognising and recording expenses

5
Q

Accounting adjustments 3 categories

A

Deferrals
Depreciation
Accruals

6
Q

Deferrals

A

Adjustment needs to be made for item that business has paid or received cash in advance. Decrease asset accounts and increase expense accounts

7
Q

Depreciations

A

Allocates the cost of an item of PPE to expense over the asset’s useful life. Lower book value of asset

8
Q

Accruals

A

Records expense before it pays for them. Liability accounts need to be adjusted at the end of the period.

9
Q

Prepaid expenses

A

Assets. e.g. prepaid rent and supplies

10
Q

Carrying amount

A

Net amount of PPE. Purchase price - accumulated depreciation expense so far

11
Q

Unearned revenue

A

Collect cash from customers without earning it

12
Q

Permanent accounts

A

Assets liabilities and shareholder’s equity