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accounting 3,4
vocab
34
Accounting
Undergraduate 1
10/16/2011

Additional Accounting Flashcards

 


 

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Term
accrual accounting
Definition
accounting that records the impact of a business event as it occurs regardless of whether the transaction affected cash.
Term
accrued expense
Definition
an expense that the business has incurred but not yet paid
Term
accrued revenue
Definition
revenue that has been earned but not yet collected in cash
Term
accumulated depreciation
Definition
the sum of all depreciation expense recorded to data for an asset.
Term
adjusted trial balance
Definition
a list of all the accounts with their adjusted balances
Term
adjusted entries
Definition
entries made at the end of the period to assign revenues to the period in which they are earned and expenses to the period in which they are incurred.  adjusting entries help measure the period's income and bring the related asset and liavility accounts to correct balances for the financial statements.
Term
accrual
Definition
the cash payment occurs after an expense is recorded or the cash is recieved after the revenue is earned.
Term
book value ( of a plant asset)
Definition
the asset's cost minus accumulated depreciation.
Term
contra account
Definition
an account that always has a companion account and whose normal balance is opposite that of the companion account.
Term
deffered revenue
Definition
a liablity created when a business collects cash from customers in advance of doing work.  also called unearned revenue.
Term
depreciation
Definition
the allocaiton of plant asset's cost to expense over its useful life.
Term
liquidation
Definition
the process of going out of business by selling all the assets, paying all the liabilities, and giving any leftover cash to the owner.
Term
matching principle
Definition
guide to accounting for expenses.  identify all expenses incurred during the period, measuring the expenses, and matching them against the revenues earned during that same time period.
Term
plant assets
Definition
long-lived tangible assets-such as land, buildings, and equipment-used in the operation of a business.
Term
revenue principle
Definition
the basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record.
Term
time-period concept
Definition
ensures that informaiton is reported at regular intervals.
Term
unearned revenue
Definition
a liablity created when a business collects cash from customers in advance of doing work.  also called deferred revenue.
Term
accounting cycle
Definition
process by which compaines produce their financial statements for a specific period.
Term
closing the accounts
Definition
step in the accounting cycle at the end of the period.  closing the accounts consists of journalizing and prosting the closing entries to set the balances of the revenue, expense, and drawing accounts to zero for the next period.
Term
closing entries
Definition
entries that transfer the revenue, expesnse, and drewing balance to the capital account.
Term
current assets
Definition
assets that are expected to be converted to cash, sold or used u pduring the next 12 months or within the business's normal operationg cycle if the cycle is longer than a year.
Term
current liabilities
Definition
debts due to be paid with cash or with goods and services within one year, or within the entity's operationg cycle if the cycle is longer than a year.
Term
current ratio
Definition
current assets divided by current liabilities. this ration measures the company's ability to pay current liabilities from current assets.
Term
debt ratio
Definition
total liabilities divided by total assets.  this ratio reveals teh proporition of a company's assets that it has financed with debt.
Term
income summary
Definition
a temporary "holding tank" account into which revenues and expenses are transferred prior to their final transfer to the capital account.
Term
liquidity
Definition
measure of how quickly an item can be converted to cash.
Term
long-term assets
Definition
any asset that will NOT be converted to cash or sued up within the business's operating cycle, or one year, whichever is greater.
Term
lont-term liabilities
Definition
liabilities that are not current.
Term
operating cycle
Definition
time span during which cash is paid for goods and services, which are then sold to coustomers from whom the business collects cash.
Term
permanent accounts
Definition
accounts that are NOT closed at the end of the period-tha asset, liability, and capital accounts.  also called real accounts.
Term
post closing trial balance
Definition
list of the accunts and their balances at the end of the period after journalizing and posting the closing entries.  this last step of the accounting cycle ansures that the ledger is in balance to start the next accounting period.  it should include only balance sheet accounts.
Term
real accounts
Definition
accounts that are not closed at the end of the period-the assets, liabilities, and capital acocunts.  also called perminent accounts.
Term
temporary accounts
Definition
the revenue and expense accounts that relate to a particular accounting period and are closed at the end of that period.  for a company, the drawing accounti s also temporary.  also called nominal accounts.
Term
worksheet
Definition
an internal columnar document designed to help move data from the trial balance to their financial statements.
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