Chapter 4 Flashcards
When has an expense or revenue been deferred?
if we have postponed reporting it on the income statement
When are adjustments made to the accounting records?
At the end of the period
deferred expense
paid cash before incurring the expense
deffered revenue
recieved cash before earning revenue
accrued expense
incurred expense before paying cash
accrued revenue
earned revenue before earning cash
When are accrual adjustments needed?
when a company has earned revenue or incurred an expense in the current period but has not yet recorded it because the cash will not be recieved until a later period
Depreciation
the process of allocating the cost of buildings, vehicles, and equipment to the periods in which they are used.
What is a contra-account
an account that is an offset to, or reduction of another account
where is accumulated depreciation listed?
As a contra-asset account on the balance sheet
Where is depreciation expense located at
Income statement
True or false: Depreciation is recorded for use of equipment
True
Do adjusting journal entries involve cash?
No
Correcting entry
fixing a mistake on a journal entry
Which account will have a zero balance after closing entries have been journalized and posted
sales revenue
