chapter 3 summary cheat sheet Flashcards
prepaid expenses
assets paid for in advance of receiving their benefits.
when assets are used the advanced payments become _______
expenses
accumulated depreciation
a seperate contra account.
a contra account is linked with
another account
a contra account has an opposite what
normal balance and its subtraction from that other account balance
unearned revenue
cash received in advance of providing products and services. when cash is accepted the compnay has liability to provide products services
accrued expenses
costs incurred in a period that is both unpaid and unrecorded.
accrued interest formula
principle amount owed x annual interest rate x fraction of year since last payment
accrued revenues
revenues earned in a period rhat are both unrecorded and not yet received in cash
unadjusted trial balance
a list of ledger accounts and balances before adjustments are recorded
adjusted trial nalace
a lits of accounts and balances after adjusting entries have been recorded and posted to ledger
closing process
occurs at period end after financial statements have been prepared. resets revenue, expense, and dividends balances to zero
temporary accounts
closed at oeriod end. they consist of revemue, expese, dividends, and income summary
permanent accounts
not closed at period end. consist of asset, laibilty, common stock and retained earnings
income summar
a temporary account only used for the closing process that has a credit for total revenues and a debit for total expenses
