Ch2. prt 2/2

Deferrals

are expenses or revenues that are recognized at a date later than the point when cash was originally exchanged (To defer means to postpone or delay.)

Useful life

an accounting estimate of the number of years it is likely to remain in service for the purpose of cost-effective revenue generation

real account

account that does not close at the end of the accounting year

Nominal Account

temporary account formed and maintained by a business. It includes all necessary records of the business's expenses, losses, gains and revenues for a particular financial period

Event

A happening of consequence. An event generally is the source or cause of changes in assets, liabilities, and equity. may be external or internal.

Account

A systematic arrangement that shows the effect of transactions and other events on a specific element (asset, liability, and so on)

T-account

format of an account often resembles the letter T, with debit on left and credit on right