Timing and Reporting
Financial statements that report a company's business activities for less than one year.
What are interim financial statements?
An asset that is not depreciated.
What is land?
Payments received in advance of services performed.
What are unearned revenues?
A list of accounts and balances prepared before adjustments are recorded.
What is an unadjusted trial balance?
The assumption that presumes that an organization’s activities can be divided into specific time periods such as a month, a three-month quarter, a six-month interval, or a year.
What is the time period assumption (aka periodicity)?
Under this method of accounting no adjustments are made for prepaid, unearned, and accrued items.
What is the cash basis of accounting?
The portion of a plant asset's cost that is allocated for a period.
What is depreciation expense?
Assets paid for in advance of receiving their benefits.
What are prepaid expenses?
Financial statements can be prepared directly from this.
What is an adjusted trial balance?
The 12-month period that ends when a company's sales activities are at their lowest level.
What is the natural business year?
The two main accounting principles used in the adjusting process.
What is revenue recognition principle and the expense recognition principle (aka matching principle)?
The method of depreciation that allocates an an equal portion of the depreciable cost of plant assets to each accounting period in its useful life.
What is straight-line depreciation?
Recorded during the adjusting process at the end of one accounting period that will result in cash receipts in a future period.
What are accrued revenues?
Financial statements issued in accordance with generally accepted accounting principles (GAAP) must be prepared following this method of accounting.
What is the accrual basis of accounting?
An annual reporting period consisting of any twelve consecutive months.
What is a Fiscal Year?
The two reasons adjustments are required.
What are to bring an asset or liability account to its proper amount and to update a related expense or revenue account?
The account that includes total depreciation expense for all prior periods for which an asset was used.
What is accumulated depreciation?
Journal entries that are recorded during the adjusting process involving assets and liabilities that had not previously been recorded.
What are accrued revenues and expenses?
The order in which financial statements are prepared.
What is income statement, statement of owner's equity, balance sheet?
The difference between the cost of an asset and the accumulated depreciation for that asset.
What is Book Value?
The three rules for preparing adjusting journal entries.
What are no compound entries (usually); affects at least one income statement account and one balance sheet account; and never affects the cash account?
The depreciable cost of plant assets.
What is the original cost less estimated salvage value?
An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account.
What is a contra account?
The balancing figure that must match on the Income Statement and Balance Sheet columns of a Worksheet.
What is Net Income or Net Loss?
The financial ratio that shows how many cents of profit is in each dollar of sales.
What is the profit margin?