All about that BASE-is
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When revenues and expenses are reported on the income statement in the period in which cash is received or paid
Cash basis of accounting
This occurs when cash related to a future revenue or expense has been initially recorded as a liability or an asset
Deferral
Physical resources that are owned and used by a business and are permanent or have a long life
Fixed or Plant assets
The first financial statement prepared directly from the adjusting trial balance
Income statement
The balance of these accounts on the balance sheet are carried forward from year to year
Permanent or real accounts
The expenses incurred in generating revenue must be recorded in the same period as the related revenue
Expense recognition principle
When revenue has been earned or an expense has been incurred but has not been recorded
Accrual
The decrease in usefulness of a fixed or plant asset
Depreciation
This statement is is prepared by entering the beginning
balances for common stock and retained earnings
Statement of stockholders' equity
The process of transferring the balance of a nominal account to a real account
Closing process
The analysis and updating of accounts at the end of the period before the financial statements are prepared
The adjusting process
Cash received for a future revenue and recorded as a liability
Unearned Revenue
This contra asset account is deducted
from their related fixed asset accounts on the balance sheet
Accumulated Depreciation
This financial statement separates both assets and liabilities into current and non-current sections
Balance sheet
These accounts report amounts for only one period in which they relate and are not carried forward
Temporary or nominal accounts
When revenues are reported on the income statement in the period in which a service has been performed or a product has been delivered
Accrual basis of accounting
Cash paid for a future expense and recorded as an asset
Prepaid Expense
The cost of an asset minus the accumulated depreciation of the asset
Book Value of the asset
This financial statement is prepared by analyzing the cash account; In doing so, each cash transaction is classified as an operating, investing, or financing activity
Statement of cash flows
These entries are recorded in the journal and are dated as of the last day of the accounting period
Closing entries
Revenues are recorded when earned, which is when the services have been performed or products have been delivered to customers
Revenue recognition principle
On November 20, Cassie purchases a $200 ticket on Delta Airlines to fly to Orlando on January 28 of the next year. Assuming Delta Airlines has a fiscal year end of December 31. For Delta, this is an example of...
Deferred revenue
The contra asset account designated for the deprecation of land
None... land is not depreciated
These are obligations of the company that will not be due for a long time (usually more than one year)
Long-Term liability
On January 1 (the beginning of the accounting period), NetSolutions should have a revenue balance of this
Zero