Matching
Match the appropriate definition with the following terms.
Premises:
The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.
The accounting system that recognizes revenue when cash is received and records expenses when cash is paid.
The process of allocating the costs of long-term assets to the income statement over their expected useful lives.
A set of financial statements that covers less than one year, typically one, three, or six months of activity.
Assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.
Any 12 consecutive months or 52-week period that a company adopts for its annual reporting period.
A method that allocates equal amounts of an asset's cost (less any salvage value)to depreciation expense during its useful life.
Responses:
Time period assumption
Accrued revenues
Interim financial statements
Straight-line depreciation
Depreciation
Fiscal year
Expense recognition (matching)principle
Accrual basis accounting
Cash basis accounting
Correct Answer:
Premises:
Responses:
The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.
The accounting system that recognizes revenue when cash is received and records expenses when cash is paid.
The process of allocating the costs of long-term assets to the income statement over their expected useful lives.
A set of financial statements that covers less than one year, typically one, three, or six months of activity.
Assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.
Any 12 consecutive months or 52-week period that a company adopts for its annual reporting period.
A method that allocates equal amounts of an asset's cost (less any salvage value)to depreciation expense during its useful life.
Premises:
The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.
The accounting system that recognizes revenue when cash is received and records expenses when cash is paid.
The process of allocating the costs of long-term assets to the income statement over their expected useful lives.
A set of financial statements that covers less than one year, typically one, three, or six months of activity.
Assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.
Any 12 consecutive months or 52-week period that a company adopts for its annual reporting period.
A method that allocates equal amounts of an asset's cost (less any salvage value)to depreciation expense during its useful life.
Responses:
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