Glossary Flashcards
The process of allocating the cost of a capital asset to expense over it’s useful life
Amortization
Entries made at the end of an accounting period to ensure revenue recognition and matching principles are followed
Adjusting entries
Expenses incurred but not yet paid in cash or recorded.
Liability and expense relationship
Dr expense (increase) Cr liability (increase)
Accrued expenses
Revenues earned but not yet received in cash or recorded
Asset and revenue relationship
Dr asset (increase) Cr revenue (increase)
Accrued revenue
Expenses paid in cash recorded as assets
Expire with time or consumption
Asset expense relationship
Prepaid Expenses
Revenues received in cash and recorded as liabilities, before they are earned
Earned when service provided, adjustment made to record revenue earned and remaining liability
Liability revenue relationship
Unearned revenues
Ownerships claim on total assets
Owner equity
The amount expenses exceed revenue
Net loss
The amount revenues exceed expenses
Net income
The procedure of entering transaction data in the journal
Journalizing
Transferring journal entries to ledger accounts
Posting
Book of final entry
Contains all accounts or specialized accounts
Ledger
Book of original entry
Accounting record of transactions in chronological order
Journal
General journal if not “specialized”
Claims against assets
Existing debt and obligations
Liabilities
Resources owned by the business
Things of value to carry out activities
Future benefits or services to the entities that use it.
Assets
Decrease in owner equity
Owner withdraws cash or other assts
Drawings
Gross increase in owner equity that result from business activities to earn an income
Sale of merchandise or performance of a services, rental property, loaning money
Revenue
Decrease owner equity
The cost of assets consumed or services used in the process of earning revenue
Expenses
Financial statement that presents the revenues and expenses and resulting net income or net loss for a specific period
Income statement
Financial statement that provides information about the cash inflows and outflows of an entity for a specific period of time
Statement of cash flows
Financial statement that summarizes changes in owner equity
Statement of owner equity
Economic event between the company and some outside enterprise or party
Transaction
