Fin Acct Vocab chp3.txt

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Fin Acct Vocab chp3.txt
2011-05-22 05:59:08

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  1. Accrual accounting
    Accounting that records the impact of a business event as it occurs regardless of whether the transaction affected cash.
  2. Accrued expenses
    An expense that the business has incurred but not yet paid.
  3. Accrued revenue
    A revenue that has been earned but not yet collected in cash.
  4. Accumulated depreciation
    The sum of all depreciation expense recorded to date for an asset.
  5. Adjusted trail balance
    A list of all accounts with their adjusted balances.
  6. Adjusting entries
    Entries made at the end of the period to assign revenues to the period in which they are earned and expenses to the period in which they are incurred. Adjusting entries help measure the period's income and bring the related assets and liability accounts to correct balances for the financial statements.
  7. Book value (of a plant asset)
    The asset's cost minus accumulated depreciation.
  8. Cash-basis accounting
    Accounting that records transactions only when cash is received or paid.
  9. Contra account
    An account that always has a companion account and whose normal balance is opposite that of the companion account.
  10. Deferred revenue
    A liability created when a business collects cash from customers in advance of doing work. Also called UNEARNED REVENUE.
  11. Depreciation
    The allocation of a plant asset's cost to expense over its useful life.
  12. Liquidation
    The process of going out of business by selling all the assets, paying all the liabilities, and giving any leftover cash to the stockholders.
  13. Matching principle
    Guide to accounting for expenses. Identify all expenses incurred during the period, measure the expenses, and match them against the revenues earned during that same time period.
  14. Plant assets
    Long-lived tangible assets: such as land, buildings, and equipment-- used in the operation of a business.
  15. Revenues principle
    The basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record.
  16. Time-period concept
    Ensures that information is reported at regular intervals.
  17. Unearned revenues
    A liability created when a business collects cash from customers in advance of doing work. Also called DEFERRED REVENUE.