Accrued and Prepaid Expenses and Income

Flashcards covering key concepts related to accrued and prepaid expenses and income in accounting.

Accrued Expense

An expense that is still owed at the end of a financial period; it is recognized as a liability.

Prepaid Expense

An expense that is paid in advance during the current financial period for the next financial period; it is recognized as an asset.

Matching Principle

An accounting principle that states expenses should be recorded for the financial period in which they are incurred.

Liability

A financial obligation or debt that a business owes to another party.

Asset

A resource owned by a business that is expected to provide future economic benefits.

Income Statement

A financial statement that summarizes revenues and expenses for a specific period.

Accrual

The recording of expenses or income that have been incurred or earned but not yet settled in cash.

Debit Balance

A balance on the left side of an account indicating an asset or expense.

Credit Balance

A balance on the right side of an account indicating a liability or income.

Invoice Period

The period during which the services or goods covered by an invoice are provided.