Adjusting Entries (Flashcards)

Under this system every transaction will affect at least two general ledger accounts and the debit amounts must be equal to the credit amounts.

This type of adjusting entry is needed prior to issuing financial statements because an expense/liability or revenue/asset has occurred but it is not yet recorded in the general ledger.

This type of adjusting entry is needed prior to issuing financial statements because some of the revenue and/or expense amounts in the general ledger pertain to a future accounting period.

This is a cost that has been paid but it has not yet expired. An example is a six-month insurance premium paid in advance.

This is an expense (and a related liability) which has occurred but has not yet been entered into the general ledger accounts. It will require an adjusting entry prior to issuing the financial statements.

These amounts have been received from customers in advance of completing a sale or service. They are reported as a liability until they become earned.

This is the systematic allocation of a plant asset’s cost to expense over the asset’s useful life. It is recorded by means of an adjusting entry.

These revenues (and the related asset) have been earned but have not yet been recorded in the general ledger. These will require an adjusting entry prior to issuing the financial statements.

This type of account is present in every adjusting entry along with an income statement account.

This type of account is present in every adjusting entry along with a balance sheet account.

This type of adjusting entry is used to record 1) revenues (and the related asset) that were earned but not yet recorded, and/or 2) expense or loss (and the related liability) that has occurred but has not yet been recorded.

This type of entry adjusts an amount that was paid or received in advance of it becoming an expense or revenue.

This date is likely used when making adjusting entries.

This term describes 1) a payment made before the amount becomes an expense, and 2) money received in advance of becoming revenue.

This word means to record revenues and/or expenses that have occurred but have not yet been recorded in the general ledger accounts.

This word means to delay reporting revenues and/or expenses until a later accounting period when they become earned or used up.

This type of asset account will have a credit balance. Examples include Accumulated Depreciation and Allowance for Doubtful Accounts.

This contra asset account reports the amount of depreciation that has been recorded since a plant asset was put into service.

This element of a balance sheet will report deferred revenues and accrued expenses as well as accounts with “payable” in the title.

This accounting method reports revenues when they are earned (as opposed to when the cash is received) and reports expenses when they occur (as opposed to when they are paid).

A cost that has been paid but is not used up. The portion of an insurance premium that will be reported as a current asset.

These costs have been used up and are reported as expenses on the income statement. An example is the portion of an insurance premium that is no longer prepaid.

This entry is usually recorded on the first day of the accounting period following an accrual-type adjusting entry. It is used to 1) avoid double-counting accrued expenses and accrued revenues, and 2) simplify the handling of the documents which arrive after an adjusting entry is recorded.

This asset is part of property, plant and equipment but it is not depreciated.

This method of accounting reports revenues when cash is received and reports expenses when they are paid.

This is the spreading or assigning of a cost to several accounting periods (or to products, departments, etc.). An example is the depreciation of a building.

Under the accrual method of accounting, these costs have expired, have been consumed, were needed to earn the period’s revenues, or have no future value which can be measured.

Under the accrual method of accounting, these are reported on the income statement when goods and/or services have been provided to customers (as opposed to when cash is received).

This contra asset account is associated with Accounts Receivable and Bad Debts Expense. It reports the estimated amount of the receivables that will not be collected.

This is the main criteria for reporting revenues (and the related asset) under the accrual method of accounting.

This phrase indicates that an expense and liability have occurred and will require an accrual-type adjusting entry before the financial statements are isssued.

This internal report is prepared to show that the total of the debit balances in the general ledger are equal to the credit balances.

This type of trial balance is prepared prior to entering the adjusting entries.

This type of trial balance is prepared after the adjusting entries are recorded, but before the closing entries.

This journal is used to record adjusting entries. In the past, this was referred to as the book of original entry.