Accrual Accounting
The difference between Accrual vs Cash accounting.
What is Accrual is when an event occurs, Cash is when money is paid or received?
Adjusting entries needs to be done at this time
What is every time financial statements are prepared
When adjusting trial balances this account should never be touched
What is Cash?
___ _____ is revenue for services provided but not recorded on the financial statement
What is Accrued Revenue?
This step occurs after looking at total revenue/loss
What is total Owners Equity?
An Accounting time period that lasts a full year is referred to as ____.
What is a Fiscal year
When money has been collected for a future service that has not been provided
What is Unearned Revenue?
Daryl gave his money to his insurance provider for the house he rents out, so he has insurance for three months in advance. And has yet to have any insurance money used, this money would be put under this type of account
What is Prepaid Insurance?
Expenses that are incurred but not paid or received are called
What is Accrued Expenses?
Depreciated equipment falls under this category of the A=L+E equation
What is assets?
When a service is performed, or the the goods have been sold and delivered, regardless of when cash is collected it falls under this principle of accounting
What is the Revenue Recognition Principle
This allocates an asset's over the periods it was used
What is Depreciation?
David must pay his employees for $2000 from the previous month for their current paycheck, the two accounts needed to be used are__ and ___
What is Salary Expenses and Salaries Payable?
When adjusting entries for accrued revenue this is an increase ____ to an asset account and increase of ____ to revenue account
What is Debit and Credit?
these two things happen when prepay adjustments arent made
What is both assets and Owners equity are over stated?
This determines when one would recognize expenses.
What is the matching concept?
This is the formula for calculating depreciation
What is divide the cost of the asset by its useful lifetime?
Jamie purchased equipment for $3600 to use for 24 months, this is how much depreciation occured over the first two months
What is $300?
When you are adjusting entries for accrued expenses this results in an increase____ in liability account and increase of _____ in the expense account
What is Debit and Credit?
It would be a problem for a company if they recorded expenses for a job in one year and recorded cash received in the next year because
What is it would create a discrepancy for profit loss each year.
When cash is collected during 2020 for revenue recognized in 2019 this is the year the revenue should be included in.
What is 2019?
Prepayment adjustments are necessary because
What is the prepayment has been used and is no longer an asset?
After Colleen finished work for $500,she had received prior what would the adjusting entry look like
What is $500 Unearned Revenue and $500 Service Revenue?
If john borrows $3500 from his grandfather with an interest of 4 percent for one year. What is $3500 John is borrowing called
What is Principal Amount?
Every adjusting entry will require one ____ _____ and one _____ ______ _____
What is Income Statement and Balance sheet account?