Accounting Flashcards
What is accrual accounting?
Revenues and expenses are not necessarily recognised when cash is received or paid out.
What is cash accounting?
Revenue is recorded when cash is received and expenses are recorded when they are paid.
What is the Conservatism concept?
Increases in revenue (and equity in general) are recorded only when there is reasonable assurance that payment will be received.
What is the Realisation concept?
You do not record - or realise - an increase to Revenue until the product has been delivered to the Customer.
What are synonyms of Deferred Revenues?
Precollected Revenue, Unearned Revenue, Advances from Customers
What is a Deferred Revenue?
When the Seller owes a Product to the Buyer
What is an expense?
A decrease in equity.
What is an expenditure?
Either a decrease in Assets or an increase in Liabilities
In terms of timeline, what is one difference between an expense and an expenditure?
An expense is an expired cost, whilst an expenditure is an unexpired cost.
