ACCT 2121 Ch 4 Vocab – Flashcards
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Prepaid expenses
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An expense not yet incurred; paid in advance.
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Unearned Revenues
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A revenue not yet recognized; collected in advance.
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Accrued Revenues
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A revenue recognized; not yet collected or recorded.
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Accrued Expenses
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An expense incurred; not yet paid or recorded.
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Periodicity Assumption
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The economic life of a business can be divided into artificial time periods
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Cash Basis
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Events recorded only in periods the company receives or pays cash
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Revenue recognition principle
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Revenue is recognized when the performance obligation is satisfied
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Prepaid expenses
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Expenses paid before they are incurred
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Expense recognition principle
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Efforts are related to accomplishments
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Accrued revenues
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Revenues earned but not yet received
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Depreciation
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A cost allocation process
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Post-closing trial balance
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Includes only permanent—balance sheet—accounts
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Accrued expenses
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An expense incurred; not yet paid or recorded.
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Book value
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Cost less accumulated depreciation
