Accounting Primer Flashcards
Original Entry
record cash receipt and establish a liability (unearned rev); establish asset & liability
Adjustment Entry
reduce liability when you get the money; reduce liability and record expense; typically made at the end of a period to record items like accruals that aren’t reflected in the accounting system
Unearned (deferred) revenue
company gets cash before earning the revenue (delivery the good/service); counts as a liability
Unbilled (accrued) revenue
company earns revenue before getting cash (from a client), the cash isn’t recorded until it hits the company
Prepaid Expenses
company makes a payment before the recognize the expense (prepaid rent); they will be marked as expenses (expensed) in the future
Accrued Expenses
expenses you have that haven’t been paid/called on yet; liabilities
Journal Entries
transactions are recorded in chronological order
General Ledgers
shows business transactions by account
Trial Balance
lists account balances at a point in time; helps identify adjustments that need to take place; shows ONLY ending values (the ledger doesn’t)
Financial Statemetns
final product of journal entries, general ledgers, trail balance
Debit
record increase in assets/expense accounts or decrease in liability and OE’s accounts
Credit
record increases in liability, OE, and revenue accounts OR decreases in assets
