Term
| accounting period concept |
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Definition
| The accounting concept that assumes that the economic life of the business can be divided into time periods |
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Term
| accrual basis of accounting |
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Definition
| Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which they are earned or incurred |
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Definition
| Expenses incurred but not yet paid in cash or recorded |
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Definition
| Revenues earned but not yet received in cash or recorded |
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Definition
| The contra asset account credited when recording the depreciation of a fixed asset |
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Definition
| The trial balance prepared after all the adjusting entries have been posted |
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Term
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Definition
The journal entries that bring the accounts up to date at the end of the accounting period
Needed to ensure that the revenue recognition and matching principles are followed |
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Term
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Definition
| An analysis and updating of the accounts when financial statements are prepared |
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Term
| book value of the asset (or net book value) |
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Definition
| The difference between the cost of a fixed asset and its accumulated depreciation |
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Definition
| Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which cash is received or paid |
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Term
| contra account (or contra asset account) |
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Definition
An account offset against another account
Account that accumulates a balance that is subtracted from another account |
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Term
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Definition
| To lose usefulness as all fixed assets except land do |
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Term
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Definition
| The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life |
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Term
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Definition
| The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life |
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Term
| fixed assets (or plant assets) |
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Definition
| Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time |
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Term
| matching concept (or matching principle) |
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Definition
| match expenses with the revenues in the period when the company makes efforts to generate those revenues |
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Term
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Definition
Items such as supplies that will be used in the business in the future
Expenses paid in cash and recorded as assets before they are used or consumed |
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Term
| revenue recognition concept |
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Definition
The accounting concept that supports reporting revenues when the services are provided to customers.
Recognize revenue in the accounting period in which it is earned |
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Term
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Definition
The liability created by receiving revenue in advance
Revenues received in cash and recorded as liabilities before they are earned |
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Definition
| Economic life of business can be divided into artificial time periods |
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Definition
| Recorded in the period in which they are earned |
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Term
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Definition
| Recognized in the period in which it is incurred |
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