chapter 7 Flashcards
what is cost of sales?
cost incurred in buying inventory that was sold.
what is matching theory?
expenses incurred must be matched against income earned in the same period to determine the gross profit/ profit for that period.
what is the difference between cost of sales and other expenses?
cost of sales is the total cost price of goods that have been sold. other expenses is the other cost incurred during the operation of a business to earn income.
what is other expenses?
other cost incurred during the operation of a business to earn income
what is expense payable?
expenses that are incurred but have not been paid
what is the adjusted entry for expense payable?
Dr other expenses
Cr expenses payable
what is prepaid expenses?
Amounts that the business paid in advance before using the services.
what is the adjusted entry for prepaid expense?
Dr prepaid expenses
Cr other expenses
