TLE 2Q reviewer

Adjusting entries

Journal entries prepared at the end of the accounting period to update accounts with transactions spanning more than one accounting period.

Overstated

When an account's unadjusted balance is more than the true, adjusted amount.

Understated

When an account's unadjusted balance is less than the true, adjusted amount.

Accruals

One of the four basic kinds of adjusting entries, which involves accumulating or growing values over time until cash is used to settle the transaction.

Accrued expense

An expense already incurred or used, but cash is not yet paid.

Accrued income

Cash has not yet been received for income that was already earned from providing services.

Deferrals

One of the four basic kinds of adjusting entries, which involves delaying or postponing expenses or income.

Prepaid expense

An expense already paid in advance but not yet incurred.

Prepayments

Unearned income in which cash is already received in advance for services yet to be provided.

Bad debts

Anticipated losses of a business arising from doubtful accounting when the customer does not obligate to pay.

Allowance for bad debts

Contra-asset account affecting the accounts receivable to account for bad debts.

Depreciation

Annual portion of the cost of a fixed asset charged as an expense.

Land

Not subjected to depreciation as it appreciates over time.

Annual depreciation

The depreciation expense charged per year.

Monthly depreciation

The depreciation expense charged per month.

Depreciation expense - acquisitioned

The depreciation expense calculated based on the historical value, salvage value, estimated useful life, and annual depreciation rate.

Monthly depreciation x months passed

The accumulated depreciation calculated based on the monthly depreciation and the number of months passed.