Term
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Definition
| Accounting basis in which companies record, in the periods in which the events occur, transactions that change a company's financial statements, even if cash was not exchanged. |
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Term
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Definition
| Expenses incurred but not yet paid in cash or recorded |
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Term
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Definition
| Revenues for services performed but not yet received in cash or recorded. |
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Term
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Definition
| A list of accounts and their balances after all adjustments have been made. |
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Term
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Definition
| Entries made at the end of an accounting period to ensure that the revenue recognition and expense recognition principles are followed. |
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Term
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Definition
| The difference between the cost of a depreciable asset and its related accumulated depreciation. |
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Term
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Definition
| Accounting basis in which a company records revenue only when it receives cash and an expense only when it pays cash. |
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Term
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Definition
| Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders' equity account, Retained Earnings. |
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Term
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Definition
| An account that is offset against an asset account on the balance sheet. |
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Term
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Definition
| The process of allocating the cost of an asset to expense over its useful life. |
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Term
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Definition
| The planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income |
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Term
| Expense recognition principle (matching principle) |
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Definition
| The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues. |
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Term
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Definition
| An accounting period that is one year long. |
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Term
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Definition
| A temporary account used in closing revenue and expense accounts. |
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Term
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Definition
| An assumption that the economic life of a business can be divided into artificial time periods. |
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Term
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Definition
| Balance sheet accounts whose balances are carried forward to the next accounting period. |
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Term
| Post-closing trial balance |
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Definition
| A list of permanent accounts and their balances after a company has journalized and posted closing entries |
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Term
| Prepaid expenses (prepayments) |
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Definition
| Expenses paid in cash before they are used or consumed. |
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Term
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Definition
| Indicates the level of full and transparent information that a company provides to users of its financial statements. |
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Term
| Revenue recognition principle |
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Definition
| The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied. |
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Term
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Definition
| An entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period. |
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Term
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Definition
| Revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period. |
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Term
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Definition
| Cash received and a liability recorded before services are performed. |
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Term
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Definition
| The length of service of a productive asset. |
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Term
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Definition
| A multiple-column form that companies may use in the adjustment process and in preparing financial statements. |
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