Glossary – Chapter 3


AJAX progress indicator
  • Expenses and revenues that gradually accumulate throughout an accounting period
  • The accounting process whereby revenues are measured and recorded as earned, while expenses are recorded as incurred
  • Unpaid expenses that have already been incurred
  • Revenues that have been earned and recorded, but are not as yet collected
  • A trial balance prepared after adjusting entries have been prepared and posted to the ledger
  • To analyze account balances and update them at the end of an accounting period to reflect the correct measure of revenues and expenses
  • Cost minus accumulated depreciation; the net amount at which an asset is reported on the balance sheet
  • An accounting approach where revenue is recorded when cash is received (no matter when "earned"), and expenses are recognized when paid (no matter when "incurred")
  • An account that is subtracted from a related account -- contra accounts have opposite debit/credit rules
  • The process used to allocate the cost of a long-lived property to the accounting periods benefited
  • A one-year accounting period that does not correspond to a calendar year
  • To associate expenses with revenues, and record them in simultaneous accounting periods
  • Like the cash basis, except that certain large expenditures for durable assets may be recorded as assets initially
  • Applicable to certain businesses that have a seasonal business pattern, and an attempt is made to establish an accounting fiscal year to match
  • An accounting assumption that purports to divide a continuous business process into measurement intervals, such as months, quarters, and years
  • Goods or services purchased in advance of their consumption
  • The point at which revenue is recognized in the accounting records; ordinarily the point of sale
  • Revenue that has been collected in advance of providing goods and services to "earn it;" reported as a liability until earned