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Midterm Flashcards
Midterm Methods and Vocabulary
24
Accounting
Graduate
10/11/2013

Additional Accounting Flashcards

 


 

Cards

Term
net income
Definition
the net increase in SHE that results from operation
Term
going concern/continuity
Definition
the belief that a company goes on indefinitely
Term
interim periods
Definition
accounting periods under a year
Term
accrual accounting (matching rule)
Definition
measured by assigning:
-revenues to the accounting period in which the goods are sold or the services are performed
-expenses to the accounting period in which they are used to produce revenue
Term
cash basis of accounting
Definition
practice of accounting for revenues in the period in which cash is received and for expenses in the period in which cash is paid
Term
revenue recognition
Definition
determining WHEN revenue should be recorded
Term
conditions for revenue recognition
Definition
-persuasive evidence of an arrangement exists
-a product or service has been delivered
-the seller's price to the buyer is fixed or determinable
-collectability is reasonably ensured
Term
conditions for recognizing expenses
Definition
-there is an agreement to purchase goods or services
-the goods have been delivered or the services rendered
-a price has been established or can be determined
-the goods or services have been used to produce revenue
Term
four types of adjusting entries
Definition
1. allocating recorded costs between two or more accounting periods
2. recognizing unrecorded expenses
3. allocating recorded, unearned revenues between two or more accounting periods
4. recognizing unrecorded, earned revenues
Term
examples of 1. allocating recorded costs between two or more accounting periods
Definition
prepaid rent, prepaid insurance, supplies, depreciation. involves an asset account and an expense account
Term
examples of 2. recognizing unrecorded expenses
Definition
wages and interest that have been incurred but are not recorded during an accounting period. involves an expense account and a liability account.
Term
examples of 3. allocating recorded, unearned revenues between two or more accounting periods
Definition
payments received in advance and deposits made for goods or services to be delivered or provided in the future. involves a liability account and a revenue account.
Term
examples of 4. recognizing unrecorded, earned revenues
Definition
revenue that a company has earned for providing a service but for which it has not billed or collected a fee by the end of the accounting period. involves an asset account and a revenue account.
Term
prepaid expenses: how to adjust
Definition
DR expense
CR asset
Term
prepaid rent: how to adjust
Definition
DR to rent expense
CR to pp rent
Term
supplies: how to adjust
Definition
DR supplies expense
CR supplies
Term
accrued expenses
Definition
when expenses and the corresponding liability accumulate
Term
unrecorded (accrued wages): how to adjust
Definition
DR wages expense
CR wages payable
Term
estimated income taxes: how to adjust
Definition
DR income taxes expense
CR income taxes payable
Term
unearned revenues (deferred revenues)
Definition
revenues received in advance
Term
unearned revenue: how to adjust
Definition
DR to unearned [service] revenue
CR to [service] revenue
Term
accrued revenues
Definition
revenues a company has earned by performing a service or delivering goods but for which no entry has been made in the accounting records
Term
[service] revenue: how to adjust
Definition
DR to A/R
CR to [service] revenue
Term
earnings management
Definition
the manipulation of revenues and expenses to achieve a specific outcome
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