Accoun tin g 101 Chapter 3 an d 4
com plete ver ifi ed solution s +
r ation ales (PASS GUARANTEED)
accrual based accounting - answer Record transactions that change a
company's financial statements in the periods in which the events
occur.
cash based accounting - answer -recording transaction when cash is
received
-fails to record revenue that is earned but has not received the cash for
yet
-is not in accordance with GAAP
revenue recognition principle - answer requires that companies
recognize revenue in the accounting period in which the service
obligation is satisfied
expense recognition principle - answer expenses be matched with
revenues
adjusting entries - answer -ensures the correct reporting of amounts on
financial statements
, -consists of deferrals and accruals
deferrals - answer -Adjusting entries for either prepaid expenses or
unearned revenues.
-cost or revenues that are recognized at a later date then the point
when cash was originally exchanged.
accruals - answer Adjusting entries for either accrued revenues
(revenue earned but not received in cash) or accrued expenses
(expenses incurred but not paid).
prepaid expense - answer -cost that expire with the passing of time or
through use. (ex. supplies, insurance)
-prior to adjustment assets are overstated, liabilities are understated
useful life - answer the period of service that a asset is good for
depreciation - answer allocating the cost of an asset to expense over its
useful life
-is an estimate
Book value - answer The difference between the cost of any depreciable
asset and its related accumulated depreciation
com plete ver ifi ed solution s +
r ation ales (PASS GUARANTEED)
accrual based accounting - answer Record transactions that change a
company's financial statements in the periods in which the events
occur.
cash based accounting - answer -recording transaction when cash is
received
-fails to record revenue that is earned but has not received the cash for
yet
-is not in accordance with GAAP
revenue recognition principle - answer requires that companies
recognize revenue in the accounting period in which the service
obligation is satisfied
expense recognition principle - answer expenses be matched with
revenues
adjusting entries - answer -ensures the correct reporting of amounts on
financial statements
, -consists of deferrals and accruals
deferrals - answer -Adjusting entries for either prepaid expenses or
unearned revenues.
-cost or revenues that are recognized at a later date then the point
when cash was originally exchanged.
accruals - answer Adjusting entries for either accrued revenues
(revenue earned but not received in cash) or accrued expenses
(expenses incurred but not paid).
prepaid expense - answer -cost that expire with the passing of time or
through use. (ex. supplies, insurance)
-prior to adjustment assets are overstated, liabilities are understated
useful life - answer the period of service that a asset is good for
depreciation - answer allocating the cost of an asset to expense over its
useful life
-is an estimate
Book value - answer The difference between the cost of any depreciable
asset and its related accumulated depreciation
