Term
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Definition
the net increase in SHE that results from operation |
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Term
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Definition
the belief that a company goes on indefinitely |
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Term
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Definition
accounting periods under a year |
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Term
accrual accounting (matching rule) |
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Definition
measured by assigning: -revenues to the accounting period in which the goods are sold or the services are performed -expenses to the accounting period in which they are used to produce revenue |
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Term
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Definition
practice of accounting for revenues in the period in which cash is received and for expenses in the period in which cash is paid |
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Term
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Definition
determining WHEN revenue should be recorded |
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Term
conditions for revenue recognition |
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Definition
-persuasive evidence of an arrangement exists -a product or service has been delivered -the seller's price to the buyer is fixed or determinable -collectability is reasonably ensured |
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Term
conditions for recognizing expenses |
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Definition
-there is an agreement to purchase goods or services -the goods have been delivered or the services rendered -a price has been established or can be determined -the goods or services have been used to produce revenue |
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Term
four types of adjusting entries |
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Definition
1. allocating recorded costs between two or more accounting periods 2. recognizing unrecorded expenses 3. allocating recorded, unearned revenues between two or more accounting periods 4. recognizing unrecorded, earned revenues |
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Term
examples of 1. allocating recorded costs between two or more accounting periods |
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Definition
prepaid rent, prepaid insurance, supplies, depreciation. involves an asset account and an expense account |
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Term
examples of 2. recognizing unrecorded expenses |
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Definition
wages and interest that have been incurred but are not recorded during an accounting period. involves an expense account and a liability account. |
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Term
examples of 3. allocating recorded, unearned revenues between two or more accounting periods |
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Definition
payments received in advance and deposits made for goods or services to be delivered or provided in the future. involves a liability account and a revenue account. |
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Term
examples of 4. recognizing unrecorded, earned revenues |
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Definition
revenue that a company has earned for providing a service but for which it has not billed or collected a fee by the end of the accounting period. involves an asset account and a revenue account. |
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Term
prepaid expenses: how to adjust |
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Definition
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Term
prepaid rent: how to adjust |
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Definition
DR to rent expense CR to pp rent |
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Term
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Definition
DR supplies expense CR supplies |
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Term
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Definition
when expenses and the corresponding liability accumulate |
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Term
unrecorded (accrued wages): how to adjust |
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Definition
DR wages expense CR wages payable |
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Term
estimated income taxes: how to adjust |
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Definition
DR income taxes expense CR income taxes payable |
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Term
unearned revenues (deferred revenues) |
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Definition
revenues received in advance |
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Term
unearned revenue: how to adjust |
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Definition
DR to unearned [service] revenue CR to [service] revenue |
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Term
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Definition
revenues a company has earned by performing a service or delivering goods but for which no entry has been made in the accounting records |
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Term
[service] revenue: how to adjust |
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Definition
DR to A/R CR to [service] revenue |
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Term
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Definition
the manipulation of revenues and expenses to achieve a specific outcome |
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