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Depreciation
The portion of useful life that is expiredof all capital assets.
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Prepaid Expenses
The portion of current assets that have been used up or expired.
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Accured Revenues
Revenues that has been done but not recorded and we have not recieved payment for.
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Accured Expenses
Expenses that have occurred but were not recorded and that we have not paid for.
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Unearned Revenues
The amount of previous unearned revenues that have now been earned in this peroid.
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Straight Line Depreciation Equation
Cost of Asset - Estimate Salvage Value / Estimated Useful Life
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Matching Principle
matches expenses in the same accounting peroid as the revenues they helped earn.
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Timeliness Principle
assumes activities can be divided into specific time peroids.
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General Journal
Most flexible; can be used to record any type of transaction
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Journal
where transactions are recorded before they are recorded into accounts; posted from journal to ledger.
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Ledger
record containing all accounts used by a business.
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Posting
Transferring journal entries into ledger accounts.
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Slide
Error occuring from adding or deleting a zero in a value.
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Transposition Error
two digits being switched or transposed within a number
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Accounting Equation
- A=L+E
- AKA: Balance Sheet Equation!!
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Balance Sheet
- reports financial position of a business at a point in time.
- - Assets = Liabilities + Owners Equity
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Business Entity Principle
requires every business be separte from its owner.
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Cost Principle
requires financial statement info to be based on actual costs incurred in transaction.
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Equity
owners claim on the assets of a business.
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Going Concern Principle
requires financial statements to reflect that the business will continue operating instead of being closed or sold.
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Income Statement
- subtracts expenses from revenues.
- Revenues - Expenses =NI/NL
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Monetary Unit Principle
expression of trasactions in money units.
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Revenue Recongition Pronciple
revune is recorded at the time it is earned reguardless of whether cash or another asset has been exchanged.
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Statement of Changes in Equity
- reports changes in equity over the reporting peroid.
- - Starting Capital + Investments +/- NI/NL-Withdrawals =Owner, Capital
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Contra Account
- linked with another account and having an opposite normal balance.
- Subtraction from the other accounts balance.
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Account Form Balance Sheet
Lists assets on left and liabilities on the right.
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Accural Basis Accounting
financial statements that uses adjusting process to recongize revenues when earned and expenses when incurred.
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Cash Basis Accounting
revenues are recongized when cash is recieved, and expenses are recongized when cash is paid.
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Interim financial reports
financial reports covering less than one year.
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