Accrual Accounting
This type of journal entry is a direct implementation of accrual accounting.
What is an adjusting entry?
This financial statement summarizes the business's operating results by matching revenue earned during a specific period with the expenses incurred to generate that revenue?
What is the income statement?
In this type of accounting, revenues are recognized when earned, regardless of when cash is received.
What is accrual accounting?
This statement reflects any increases or decreases in retained earnings over the period. Increases typically come from net income, and decreases result from dividends declared or net losses.
What is the statement of retained earnings?
This principle requires that expenses be recorded in the same period as the revenues they help generate.
What is the matching principle?
This statement lists the company’s assets, liabilities, and owners' equity
What is the balance sheet?
This concept refers to the importance of an item or event in the context of a company's financial statements.
What is materiality?
This type of journal entry serves two purposes: 1. to zero out temporary income statement accounts, and 2. to update retained earnings.
What is a closing entry?
This is a key accounting tool that lists all general ledger account balances after adjusting entries are made at the end of the period.
What is an adjusted trial balance?
This concept refers to a company's ability to meet its cash obligations as they become due.
What is liquidity?