Chapter 3 Accounting for Deferrals

Chapter 3 Accounting for Deferrals - CHAPTER ACCOUNTING FOR...

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CHAPTER three ACCOUNTING FOR DEFERRALS Accounting for Deferrals Illustrated Unearned Revenue – Revenue for which cash has been collected but the service has not yet been performed. Straight Line – Allocation method computed by subtracting the salvage value from the cost and then dividing by the number of years of useful life. Depreciation Expense – Portion of the original cost of a long term tangible asset allocated to an expense account in a given period. Long Term – Usually defined as a period longer than one year. Contra Asset Account – Account subtracted from another account with which it is associated; has the effect of reducing the asset account with which it is associated. Accumulated Depreciation – Contra asset dude account that indicates the sum of all depreciation expense recognized for an asset since the date of acquisition. Book Value – Historical cost of an asset minus the accumulated depreciation; alternatively, undepreciated amount to date. The Matching Concept
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This note was uploaded on 04/18/2008 for the course ACCT 201 taught by Professor Stewart during the Fall '06 term at Towson.

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Chapter 3 Accounting for Deferrals - CHAPTER ACCOUNTING FOR...

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