C.O.A.
Accounting systems are designed to show the increases and decreases in each accounting equation element as a separate record called this
What is an account?
This account form resembles the letter T
What is a T account?
When revenues and expenses are reported on the income statement in the period in which cash is received or paid
What is the 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
What is a deferral?
Physical resources that are owned and used by a business and are permanent or have a long life
What are fixed or plant assets?
What is a ledger?
Using the rules of debit and credit, transactions are initially entered in a record called a
What is a journal?
The expenses incurred in generating revenue must be recorded in the same period as the related revenue
What is the expense recognition principle?
When revenue has been earned or an expense has been incurred but has not been recorded
What is an accrual?
The decrease in usefulness of a fixed or plant asset
What is depreciation?
This set of accounts are normally those that start with the number 1
What are assets?
When the accounts receivable account is credited, this happens
What is the account is decreased?
The analysis and updating of accounts at the end of the period before the financial statements are prepared
What is the adjusting process?
Cash received for a future revenue and recorded as a liability
What is unearned revenue?
This contra asset account is deducted
from their related fixed asset accounts on the balance sheet
What is accumulated depreciation?
This set of accounts are normally those that start with the number 5
What are expenses?
This system requires every business transaction to be recorded in at least two accounts and the total debits must equal total credits
What is a double-entry accounting system?
When revenues are reported on the income statement in the period in which a service has been performed or a product has been delivered
What is the accrual basis of accounting?
Cash paid for a future expense and recorded as an asset
What is a prepaid expense?
The cost of an asset minus the accumulated depreciation of the asset
What is the book value of the asset?
Accounts beginning with these numbers normally have a credit balance
What are accounts beginning with 2, 3, and 4?
On a balance sheet, a debit will decrease me and a credit will increase me
What is a liability or SE account?
Revenues are recorded when earned, which is when the services have been performed or products have been delivered to customers
What is the 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...
What is deferred revenue?
What is none... land is not depreciated