U2T1 Key Terms

Front

Presumes that a business enterprise (entity) has an existence separate from the private financial affairs of its owner/s.

Back

Accounting Entity concept

Front

Divides the life of an enterprise into arbitrary time periods.

Back

Accounting Period concept

Front

Costs incurred by a business in the current accounting period that have not yet been paid.

Back

Accrued expenses

Front

Revenues that have been earned in the current accounting period but not yet received.

Back

Accrued revenues

Front

An accounts receivable balance which will not be received.

Back

Bad debts

Front

General journal entries made on the balance day in order to match revenues and expenses to an accounting period for profit determination.

Back

Balance Day Adjustments

Front

the allocation of the cost of the asset to the accounting periods in which it is expected the asset will contribute to the production of revenue

Back

Depreciation

Front

records accounts receivable debts that are unlikely to be paid

Back

Doubtful debts

Front

Accounting reports are prepared under the premise that the entity will continue to operate for the foreseeable future.

Back

Going-concern principle

Front

occurs when net sales exceed the cost of goods sold

Back

Gross Profit