MATCHING concepts (CH 3) Flashcards
The accounting concept that assumes that the economic life of the business can be divided into time periods
accounting period concept
Under the basis of accounting, revenues and expenses are reported in the income statement in the period in which cash is received or paid
cash basis
Under this basis of accounting, revenues are reported in the income statement in the period in which they are earned
accrual basis
The accounting concept that supports reporting revenues when the services are provided to customers
revenue recognition concept
The accounting concept that supports reporting revenues and the related expenses in the same period
matching concept
An analysis and updating of the accounts when financial statements are prepaid
adjusting process
The journal entries that bring the accounts up to date at the end of the accounting period
adjusting entries
Items that have been initially recorded as assets but are expected to become expenses over time or through the normal operations of the business
prepaid expense
Items that have been initially recorded as liabilities but are expected to become revenues over time or through the normal operations of the business
unearned revenues
Expenses that have been incurred BUT NOT recorded in the accounts
accrued expense
Revenues that have been earned BUT NOT recorded in the accounts
accrued revenues
Physical resources that are owned and used by a business and are permanent or have a long life
fixed assets
The decrease in the ability of a fixed asset to provide useful services
depreciation
The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life
depreciation expense
The asset account credited when recording the depreciation of a fixed asset
accumulated depreciation
