accounting ch3

accounting ch3 - Accounting cycle steps in preparing...

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Accounting cycle – steps in preparing financial statements, repeated each cycle Accounting period – reporting period Accrual basis accounting – uses the adjusting process to recognize revenues when earned and expenses when incurred (matches revenues) Accrued expenses – costs that are incurred in a period but are both unpaid and unrecorded, they must be reported on the income statement of the period when incurred Accrued revenues – revenues earned in a period that are both unrecorded and not received in cash yet Adjusted trial balance – is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger Adjusting entry – to bring an asset or liability account to its proper amount Annual financial statements – report every year Book value – or net amount = asset’s costs – accumulated depreciation Cash basis accounting – recognizes revenues when cash is received and recorded expenses when cash is paid Classified balance sheet – organizes assets and liabilities into important subgroups that provide more info to decision makers Closing entries – transfer the end of period balances in revenue, expense, and dividends to retained
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This note was uploaded on 02/05/2009 for the course BMGT 220 taught by Professor Bulmash during the Fall '08 term at Maryland.

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accounting ch3 - Accounting cycle steps in preparing...

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