Chapter 3 Flashcards
Cash-Basis Accounting
record transactions only at the time cash is received or paid
Accrual-Basis Accounting
record revenues when g/s are provided to customers, and record expenses for the costs used to provided those g/s to customers
Accrued Expenses
occur when a company has used costs in the currents period, but the company hasn’t yet paid cash for those costs
Accrued Revenues
occur when a company provides products or services that hasn’t yet received cash
Adjusted Trail Balance
a list of all accounts and their balances after we have updated account balances for adjusting entries
Adjusting Entries
entries at the end of the period used to update balances of rev. and exp. that have occurred during the period but that we have not yet recorded
Book Value
an asset’s original cost less accumulated depreciation
Classified Balance Sheet
balance sheet that groups a company’s assets into current & long-term assets and that separates liabilities into current & long-term liabilities
Closing Entries
entries that transfer the balances of all temporary accounts (rev, exp, & dividends) to the balance of the Retained Earnings account
Contra Account
an account with a balance that is opposite, or “contra” to that of its related accounts
Deferred Revenues
arise when a company receives cash in advance from customers, but g/s won’t be provided until a later period
Depreciation
the process of allocating the cost of a long-term asset to expense over its useful life
Permanent Accounts
all accounts that appear in the balance sheet; account balances are carried forward from period to period
Post-closing Trial Balance
a list of accounts and their balances at a particular date after we have updated account balances for closing entries
Prepaid Expenses
arise when a company pays cash (or has an obligation to pay cash) to acquire an asset that is not used until a later period
