ch 4 terms

Question 1

how are temp accounts closed

Answer 1

rev and exp-> income summary
income summary and dividends ->retained earnings

Question 2

define accrual accounting

Answer 2

rev recorded when earned, not when cash recieved

Question 3

what is expense recognition

Answer 3

expenses journaled when an economic resource decreases

Question 4

what are accrual adjusting entries

Answer 4

when cash account is affected in a secondary journal entry later

Question 5

what are prepayment adjusting entries

Answer 5

cash account affected first, other in a secondary entry

Question 6

two types of prepayments

Answer 6

expenses and deferred rev

Question 7

what are accrued expenses

Answer 7

event occurs before expense is paid

Question 8

what is accrued revenue

Answer 8

product provided before payment received

Question 9

example of accrued expense

Answer 9

salaries

Question 10

example of accrued revenue

Answer 10

receiving payment after service

Question 11

what is retained earnings

Answer 11

net earnings minus dividends