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B-03 01problem

This document introduces key accounting terminology used to discuss concepts related to income measurement. It provides a list of 10 accounting terms and their definitions, and asks the reader to match each term with its description. The terms cover concepts such as depreciation, revenue recognition, prepaids, unearned revenue, the balance sheet approach, adjusting entries, accruals, the calendar year, the cash basis, and the periodicity assumption.

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mnrk 1997
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50 views1 page

B-03 01problem

This document introduces key accounting terminology used to discuss concepts related to income measurement. It provides a list of 10 accounting terms and their definitions, and asks the reader to match each term with its description. The terms cover concepts such as depreciation, revenue recognition, prepaids, unearned revenue, the balance sheet approach, adjusting entries, accruals, the calendar year, the cash basis, and the periodicity assumption.

Uploaded by

mnrk 1997
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Terminology B-03.

01

This chapter introduces important concepts in income measurement. Accountants oftentimes discuss
these concepts using accounting “jargon” or “terminology. Effective business communication requires that
all parties attach the same meaning to the words that are used to express concepts. Match the accounting
terms in the list on the left to the accounting concept described in the list on the right.

(1) Depreciation (a) The basic conditions require that an exchange has occurred and
the earnings process is complete.

(2) Calendar Year (b) An asset reflecting advance payment for something that will be
consumed over the future.

(3) Revenue Recognition (c) An entry usually prepared coincident with the end of an
accounting period to update the accounting for prepaids, accru-
als, and other allocations.

(4) Cash Basis (d) An annual reporting period that runs from January 1 through
December 31.

(5) Prepaids (e) Monies collected from customers for services that have not yet
been provided.

(6) Unearned Revenue (f ) An approach that results in the initial recording of prepaids to an
asset account and unearned revenues to a liability account.

(7) Balance Sheet Approach (g) The notion that a continuous business process can be divided
into time intervals such as years, quarters, or months for report-
ing purposes.

(8) Adjusting Entry (h) A systematic and rational allocation scheme to spread a portion
of the total cost of a productive asset to each period of use.

(9) Accruals (i) Expenses and revenues that gradually accumulate with the
passage of time.

(10) Periodicity Assumption (j) A simplified non-GAAP based method to record revenues as
received and expenses as paid.

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