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

Accrual accounting

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

2

Cash accounting

Records cash transactions only

3

Time-period concept

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

4

Matching principle

Forms basis for recognising and recording expenses

5

Accounting adjustments 3 categories

Deferrals
Depreciation
Accruals

6

Deferrals

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

7

Depreciations

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

8

Accruals

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

9

Prepaid expenses

Assets. e.g. prepaid rent and supplies

10

Carrying amount

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

11

Unearned revenue

Collect cash from customers without earning it

12

Permanent accounts

Assets liabilities and shareholder's equity