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accounting period concept
The accounting concept that assumes that the economic life of the business can be divided into time periods.
accrual basis of accounting
Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which they are earned or incurred.
accrued expenses
Expenses that have been incurred but not recorded in the accounts.
accrued revenues
Revenues that have been earned but not recorded in the accounts.
accumulated depreciation
The contra asset account credited when recording the depreciation of a fixed asset.
adjusted trial balance
The trial balance prepared after all the adjusting entries have been posted.
adjusting entries
The journal entries that bring the accounts up to date at the end of the accounting period.
adjusting process
An analysis and updating of the accounts when financial statements are prepared.
book value of the asset (or net book value)
The difference between the cost of a fixed asset and its accumulated depreciation.
cash basis of accounting
Under this basis of accounting, revenues and expenses are reported in the income statement in the period in which cash is received or paid.
contra account (or contra asset account)
An account offset against another account.
depreciation
The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.
depreciation expense
The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.
fixed assets (or plant assets)
Long-term or relatively permanent tangible assets that are used in the normal business operations.
matching concept (or matching principle)
A concept of accounting in which expenses are matched with the revenue generated during a period by those expenses.
prepaid expenses
Items such as supplies that will be used in the business in the future. Also see deferred expenses.
revenue recognition concept
The accounting concept that supports reporting revenues when the services are provided to customers.
unearned revenues
See deferred revenues.
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