Summary of Adjusting Entries definitions Flashcards
Summary of Adjusting Entries definitions
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Accrual Accounting System where revenues and expenses are recognized when earned or incurred, not when cash is exchanged. Prepaid Expenses Payments made in advance for goods or services, recorded as assets until consumed or expired. Rent Expense Cost recognized over time for using property or space, often adjusted from prepaid amounts. Supplies Assets purchased for future use in operations, later expensed as they are consumed. Supplies Expense Amount representing the cost of supplies used during a period, calculated by subtracting ending supplies from beginning balance. Unearned Revenue Liability created when cash is received before goods or services are delivered to customers. Revenue Income earned from providing goods or services, recognized when performance obligations are satisfied. Accrued Expenses Obligations for expenses incurred but not yet paid, recorded as liabilities until settled. Accrued Liability Balance sheet account representing amounts owed for expenses recognized but unpaid at period end. Accounts Receivable Asset representing amounts owed by customers for goods or services delivered but not yet paid for. Depreciation Systematic allocation of the cost of a long-term asset over its useful life to expense. Depreciation Expense Portion of an asset's cost recognized as expense in each period to reflect usage or wear. Accumulated Depreciation Contra asset account showing total depreciation taken on an asset, reducing its book value. Net Book Value Amount calculated by subtracting accumulated depreciation from an asset's original cost.
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