Accounting Principles - Flashcards

This set of flashcards covers key vocabulary and principles related to accounting, suitable for review and exam preparation.

Accrual Accounting

A method where revenues are recognized when earned and expenses recognized when incurred, regardless of cash flow.

Cash-Basis Accounting

A method where revenues are recognized when cash is received and expenses recognized when cash is paid.

Revenue Recognition Principle

Revenue should be recognized in the accounting period when the performance obligation is satisfied.

Expense Recognition Principle

Expenses should be matched with revenues in the period when the company makes efforts to generate those revenues.

Adjusted Trial Balance

A list of accounts and their balances after all adjustments have been made, used to prepare financial statements.

Prepaid Expenses

Expenses paid in cash before they are used or consumed, recorded as assets until they are recognized as expenses.

Unearned Revenues

Cash received before services are performed, recorded as liabilities until the service is performed.

Accrued Revenues

Revenues for services performed but not yet received in cash or recorded.

Accrued Expenses

Expenses incurred but not yet paid in cash or recorded.

Time Period Assumption

The economic life of a business can be divided into artificial time periods.

Fiscal Year

An accounting time period that is one year in length.

Calendar Year

The period from January 1 to December 31.

Trial Balance

A list of all account balances to ensure that total debits equal total credits before making adjustments.