Term
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Definition
| assumes that an organization;s activites can be divided into specific time periods such as a month, a three-month quarter, a six-month interval, or a year |
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Term
| Revenue recognition principle |
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Definition
| requires revenue be recorded when earned, not before and not after |
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Term
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Definition
| requires expenses be recored in the same period as the revenues earned as a result of these expenses |
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Term
| Accrual basis (accounting) |
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Definition
| recognize revenue when earned and match expenses with revenues. This means the exonomic effects of revenues and expenses are recorded when earned or incurred, not when cash is received or paid. The accrual basis is consistent with GAAP |
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Term
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Definition
| revenues are recognized when cash is received and expenses are recognized when cash paid. The cash basis is not consistent with GAAP |
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Term
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Definition
| is recorded to bring an asset or liability account balance to its proper amount. This entry also updates a related expense or revenue account. Adjustments are nexessary for transactions that extend over more than one period |
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Term
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Definition
| are items paid for in advance of receiving their benefits. Prepaid expenses are assets. When the assets are used, their costs become expenses and the asset is reduced. |
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Term
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Definition
| long-term tangible assets used to produce and sell products and services; they are expeced to provide benefits for more than one period. |
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Term
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Definition
| process of allocating the cost of plant and equipment assets over their expected useful lives |
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Term
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Definition
| liabilities created by cash received in advance of providing products or services. Upon receipt of cash , an obligation to provide the service or product remains. |
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