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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.