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Terms in this set (18)
What accounting helps measure and report revenues and expenses in a way that clearly represents the net income of the company?
When using the cash-basis form of accounting, when should expenses be recorded?
What occurs when the cash flow occurs after either the expense is incurred or the revenue is earned?
What would be referred to as accruals?
expenses incurred, not yet paid and goods and services provided, not yet collected
Where does prepaid rent appear?
the balance sheet (it is an asset)
What transaction would normally be recorded as an asset when cash is paid?
rent paid in advance
After the adjusting entries have been completed, the adjusted balance in the prepaid rent account represents what?
amount of prepayment that remains towards future rental periods
When should supplies be recorded as an expense?
in the period the supplies are used, regardless of when they were purchased
The adjusting entry to record the supplies used during the period will result in a?
decrease to supplies and an increase to supplies expense
What revenue arises when a business receives cash in one period, but does not provide all of the related goods or services until a later period?
When a company records an adjusting entry for services previously recorded as a deferred revenue, it records which two of the following?
credit to revenue, debit to deferred revenue
How do adjusting entries for accrued expenses affect liabilities and expenses?
adjusting entries for accrued expenses can increase liabilities and increase expenses
The expense that relates to a formal note payable and accumulates or accrues throughout the accounting period is referred to as?
An adjusting entry for an accrued expense involves what?
credit to a liability and debit to an expense
What is defined as the cost of borrowing money?
What does a classified balance sheet do?
groups assets and liabilities into current and long term categories
The entries that transfer the balances of all temporary accounts to retained earnings are referred to as what?
The information in the statement of cash flows is organized by which activities?
financing, investing, and operating
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