Accounting Language Ch3 Flashcards
accrual basis of accounting
– Revenues and expenses are reported in the income statement in the period in which they are earned or incurred. (p. 100)
accrued expenses
Expenses that have been incurred but not recorded in the accounts.
accrued revenues
– Revenues that have been earned but not recorded in the accounts
accumulated depreciation
The contra asset account credited when recording the depreciation of a capital asset.
adjusted trial balance
The trial balance prepared after all the adjusting entries have been posted
adjusting entries
The journal entries that bring the accounts up to date at the end of the accounting period
adjusting process
An analysis and updating of the accounts before financial statements are prepared
amortization/
depreciation
The systematic periodic transfer of the cost of a depreciable asset to an expense account during its expected useful life
capital assets
Long-term or relatively permanent tangible and intangible assets that are used in normal business operations
carrying amount of the asset /
net book value
The difference between the cost of a capital asset and its accumulated depreciation
cash basis of accounting
Revenues and expenses are reported in the income statement in the period in which cash is received or paid
contra accounts
Accounts that are offset against another account
depreciate
depreciate – Decreasing in usefulness over time for all capital assets, except land
depreciation expense
– The portion of the cost of a depreciable asset that is recorded as an expense each year of its useful life
notes payable
– Written promises to pay an amount and interest at an agreed-upon rate
