Key Rule 1 Flashcards
What is accounts payable?
Specific items with invoices which have been used but not paid for.
How are accounts payable different from accrued expenses?
AP: specific items with invoices
AE: monthly recurring items w/o invoices
Is accounts payable a liability or an asset?
Liability.
Accounts payable is a A/L- why?
Liability b/c the expenses haven’t been paid for yet.
Accounts payable causes cash flow to increase/ decrease and why?
Increase, b/c money not moving out.
What is accrued expenses?
Monthly recurring items w/o invoices that have been used but not paid for.
Are accrued expenses an asset or a liability?
Liability.
How do accrued expenses change the cash flow statement? And why?
cash flow increases
b/c no money moving out
What are prepaid expenses?
Services paid for but not yet used.
Are prepaid expenses on the IS? Why?
No, because they haven’t been used yet.
Are prepaid expenses an asset?
Y.
How do prepaid expenses change the cash flow statement? And why?
Decrease b/c paying with cash you don’t have yet.
What is deferred revenue?
Collected cash but haven’t yet delivered goods.
Is deferred revenue an asset or a liability? Y?
Liability. B/c you have an obligation to deliver.
What is accounts receivable?
Future cash.
