accounting principles chapter 3 questions and answers|100% correct

accounting principles chapter 3 questions and answers|100% correct Accrual-Basis Accounting Accounting basis in which companies record transactions that change a company's financial statement in the period in which the events occur Accruals adjusting entries for either accrued revenues or accrued expense Accrued expenses Expenses incurred but not yet paid in cash or recorded Accrued revenue a revenue that has been earned but not yet received in cash Adjusting trial balance A list of accounts and their balance after the company has made al adjustments book value the value at which an asset is carried on a balance sheet calendar year An accounting period that extends from January 1 to December 31 cash-basis accounting Accounting Basis in which companies record revenue when they receive cash and an expense when they pay cash contra asset account Offsets an asset account on the balance sheet. Deferrals Adjusting entries for either prepaid expenses or unearned revenues. Depreciation a decrease in price or value Fiscal year any accounting period of 12 months interim periods monthly or quarterly accounting time periods matching principle Allows a business to match revenue against expenses as a means of measuring profit for the period. Prepaid expenses Expenses paid in cash that benefit more than one accounting period and that are recorded as assets. Revenue Recognition principles The principle that companies recognize revenue in the accounting period in which it is earned. Time Period assumption assumes that the economic life of a business can be divided into artificial time periods unearned revenues Cash received and recorded as liabilities before revenue is earned. useful life The period of time an asset can be productively used.