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?
The two types of adjusting journal entries.
What are deferrals and accruals?
A list of accounts and balances prepared before adjustments are recorded.
What is an unadjusted trial balance?
The mathematical formula used to express the expanded accounting equation.
What is Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses?
The approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses when incurred.
What is the accrual basis of accounting?
The expense of allocating the cost of equipment to the periods in which it is used.
What is depreciation expense?
This type of adjusting journal entry is used to record assets paid for in advance of receiving their benefits or cash received in advance of providing products or services.
What are deferrals?
The balancing figure on the worksheet that occurs when revenues exceeds expenses.
What is Net Income?
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?
Under this method of accounting no adjustments are made for prepaid, unearned, and accrued items.
What is Cash Basis Accounting?
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?
Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense account and a credit to a liability account.
What are accrued 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?
Financial statements can be prepared directly from this document.
What is an adjusted trial balance?
The financial ratio that shows how many cents of profit is in each dollar of sales.
What is the profit margin?