General
This deferral is a method of allocation not valuation.
What is Depreciation?
What Bad Bunny made for appearing at the Super Bowl.
What is Nothing.
Prepaid expenses are initially recorded as this type of account on the balance sheet.
What is "asset"?
She had millions in unearned revenue before she started the ERA tour.
Who is Taylor Swift?
If an asset is purchased for $500, and has a useful life of 5 years, this is its depreciation expense.
What is $100?
The term for requiring that we record revenues and expenses when they are earned or incurred.
What is the matching principle?
This type of journal entry is made at the end of the year in order to bring the accounts up to date.
What is the adjusting entry?
This prepaid expense commonly involves payments for insurance policies.
What is "prepaid insurance"?
This is recorded when a company receives cash but has not yet delivered goods or services.
What is "unearned revenue"?
This type of asset, like machinery or vehicles, decreases in value over time.
What is a fixed asset, long term asset, or plant asset?
This is the opposite of cash accounting, where transactions are recorded only when cash is exchanged.
What is accrual accounting?
When a company earns $500, but has not yet been paid, we record it at the end of the year using this asset account.
What is Accounts Receivable
Prepaid expenses are gradually recognized as this type of account over time.
What is an expense?
Unearned revenue is initially recorded as this type of account on the balance sheet.
What is "liability"?
This method of depreciation spreads the asset’s cost evenly each year.
What is "straight-line"?
Standardized rules and procedures used in the United States for preparing and presenting financial statements
What is GAAP (Generally Accepted Accounting Principles)?
Financial statements may misrepresent profitability because this principle is not followed.
What is the consequence of failing to follow the matching principle?
Our employee worked in December and earned $1000 in wages, but they have not yet been paid, so we record it as this type of account on Dec. 31.
What is wages payable.
If supplies have a $500 beginning balance on Jan. 1, and the ending balance on Dec. 31 is $100, this is the supplies expense journal entry we record as an adjustment entry.
What is:
Supplies Expense 400
Supplies 400
This term is used to show what the asset can be sold for after its useful life has ended.
What is residual or salvage value.
If Beyonce is paid $12 million in in advance for performing 12 concerts, what does she earn as revenue when she performs one concert.
What is $1 million
Net income is understated without this adjustment
Failing to record adjustments to unearned revenue
(deferral revenue).
They have prepaid tuition revenue at the beginning of the semester
Who are the students?
When a company buys a $1200 12-month insurance policy we record it in the balance sheet as this type of account.
What is prepaid insurance?
When a computer is purchased for $400, no salvage value, and has a 4-year useful life, this is the first year's depreciation expense.
What is $100?