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| A balance-sheet format that lists assets on the left and liabilities and stockholders' equity on the right. |
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| An expense or a revenue that occurs before the business pays or receives cash. An accrual is the opposite of a deferral. |
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| Accounting that records the impact of a business event as it occurs, regardless of whether the transaction affected cash. |
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| An expense incurred but not yet paid in cash. |
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| A revenue that has been earned but not yet received in cash. |
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| The cumulative sum of all depreciation expense from the date of acquiring a plant asset. |
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| A list of all the ledger accounts with their adjusted balances. |
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| Book Value (of a plant asset) |
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Definition
| The asset's cost minus accumulated depreciation. |
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| Accounting that records only transaction in which cash is received or paid. |
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| A balance sheet that shows current assets seperated from long-term assets, and current liabilities seperated from long-term liabilities. |
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| The process of preparing the accounts to begin recording the next period's transactions. Closing the accounts consist of journalizing and posting the closing entries to set the balances of the revenue, expense, and dividends accounts to zero. Also called closing the accounts. |
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Definition
| Entries that transfer the revenue, expense, and dividends balances from these respective accounts to the Retained Earnings account. |
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Definition
| An account that always has a companion account whose normal balance is oppsite that of the companion account. |
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| An asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year. |
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| A debt due to be paid within one year or within the entity's operating cycle if the cycle is longer than a year. |
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Definition
Current assets divided by the current liabilities. Measures a company's ability to pay current liability with current assets.
Assets/Liabilities |
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Definition
| Radio of total liabilities to total assets. States the proportions of a company's assets that is financed with debt. |
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| An adjustment for which the business paid or received cash in advance. Examples include prepaid rent, prepaid insurance, and supplies. |
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| Allocation of the cost of a plant asset to expense over its useful life. |
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| Measure of how quickly an item can be converted to cash. |
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Definition
| An asset that is not a current asset. |
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Definition
| A liability that is not a current liability. |
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Definition
| The basis for recording expenses. Directs accountants to identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues earned during that same period. |
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Term
| Multi-Step Income Statement |
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Definition
| An income statement that contains subtotals to highlight important relationships between revenues and expenses. |
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Definition
| Time span during which cash is paid for goods and services taht are sold to customers who pay the business in cash. |
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| Assets, Liabilities, and Stockholders' Equity accounts that are not closed at the end of the period. |
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| Long-lived assets, such as land, buildings, and equipment, used in the operation of the business. Also called fixed assets. |
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| A category of miscellaneous assets that typically expire or get used up in the near future. Examples include prepaid rent, prepaid insurance, and supplies. |
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Term
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Definition
| A balance-sheet format that lists assets at the top, followed by liabilities and stockholders' equity below. |
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Definition
| The basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record. |
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Term
| Single-Step Income Statement |
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Definition
| An income statement that lists all the revenues together under a heading such as Revenues of Revenues of Gains. Expenses appear in a seperated category called Expenses or perhaps Expenses and Losses. |
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Term
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Definition
| The revenue and expense accoutns that related to a limited period and are closed at the end of the period are temporary accounts. For a corporation, the Dividends account is also temporary. |
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Definition
| Ensures that accounting information is reported at regular intervals. |
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Term
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Definition
| A liability created when a business collects cash from customers in advance of earning the revenue. The obligation is to provide a product or a service in the future. |
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