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Financial Accounting 7th ed Chapter 03 Glossary
for UoP XACC 291
20
Accounting
Undergraduate 1
02/03/2014

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Term
accrual-basis accounting
Definition
accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur. (p. 99)
Term
accruals
Definition
adjusting entries for either accrued revenues or accrued expenses. (p. 101)
Term
accrued expenses
Definition
expenses incurred but not yet paid in cash or recorded. (p. 110)
Term
accrued revenues
Definition
revenues earned but not yet received in cash or recorded. (p. 109)
Term
adjusted trial balance
Definition
a list of accounts and their balances after the company has made all adjustments. (p. 116)
Term
adjusting entries
Definition
entries made at the end of an accounting period to ensure that companies follow the revenue and expense recognition principles. (p. 101)
Term
book value
Definition
the difference between the cost of a depreciable asset and its related accumulated depreciation. (p. 106)
Term
calendar year
Definition
an accounting period that extends from January 1 to December 31. (p. 98)
Term
cash-based accounting
Definition
accounting basis in which companies record revenue when they receive cash and an expense when they pay cash. (p. 99)
Term
contra-asset account
Definition
an account offset against an asset account on the balance sheet. (p. 105)
Term
deferrals
Definition
adjusting entries for either prepaid expenses or unearned revenues. (p. 101)
Term
depreciation
Definition
the allocation of the cost of an asset to expense over its useful life in a rational and systematic manner. (p. 105)
Term
expense recognition (matching) principle
Definition
the principle that companies match efforts (expenses) with accomplishments (revenues). (p. 99)
Term
fiscal year
Definition
an accounting period that is one year in length. (p. 98)
Term
interim periods
Definition
monthly or quarterly accounting time periods. (p. 98)
Term
prepaid expenses
Definition
expenses paid in cash that benefit more than one accounting period and that are recorded as assets. (p. 102)
Term
revenue recognition principle
Definition
the principle that companies recognize revenue in the accounting period in which it is earned. (p. 99)
Term
time period assumption
Definition
an assumption that accountants can divide the economic life of a business into artificial time periods. (p. 98)
Term
unearned revenues
Definition
cash received and recorded as liabilities before revenue is earned. (p. 106)
Term
useful life
Definition
the length of service of a long-lived asset. (p. 105)
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