Unearned Revenue / Prepaid Expenses

These flashcards cover key terms and definitions related to unearned revenue and prepaid expenses, offering a concise review of essential concepts.

Unearned Revenue

Money received by a business for services not yet rendered or goods not yet delivered.

Prepaid Expenses

Payments made in advance for goods or services to be received in the future.

Revenue Recognition Principle

A principle that dictates that revenue should be recognized when it is earned, not necessarily when cash is received.

Accrual Accounting

An accounting method where revenue and expenses are recorded when they are incurred, regardless of when cash transactions occur.

Deferred Revenue

Another term for unearned revenue, indicating that the revenue is recognized in the future.

Prepayment

An advance payment made before the actual receipt of goods or services.

Current Liabilities

Obligations due to be settled within one year, including unearned revenue.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the correct period.