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| Account form balance sheet | A balance sheet that lists assets on the left and liabilities and owner's equity on the right side of the balance sheet. (See page(s) 155) |
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| Accounting period | Time frame covered by financial statements and other reports; also called reporting periods. (See page(s) 140) |
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| Accrual basis accounting | The approach to preparing financial statements that uses the adjusting process to recognize revenues when earned and expenses when incurred, not when cash is paid or received; the basis for generally accepted accounting principles. (See page(s) 140) |
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| Accrued expenses | Costs incurred in a period that are both unpaid and unrecorded; adjusting entries for recording accrued expenses involve increasing (debiting) expenses and increasing (crediting) liabilities. (See page(s) 147) |
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| Accrued revenues | Revenues earned in a period that are both unrecorded and not yet received in cash (or other assets); adjusting entries for recording accrued revenues involve increasing (debiting) assets and increasing (crediting) revenues. (See page(s) 149) |
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| Adjusted trial balance | A listing of accounts and balances prepared after adjustments are recorded and posted to the ledger. (See page(s) 154) |
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| Adjusting entry | A journal entry at the end of an accounting period to bring an asset or liability account balance to its proper amount while also updating the related expense or revenue account. (See page(s) 141) |
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| Amortization | The expense created by allocating the cost of plant and equipment to the periods in which they are used; represents the expense of using the assets. (See page(s) 143) |
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| Book value of an asset | The cost of the asset less its accumulated amortization. (See page(s) 144) |
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| Capital assets | Include long-term tangible assets, such as plant and equipment, and intangible assets, such as patents. Capital assets are expected to provide benefits for more than one period. (See page(s) 143) |
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| Cash basis accounting | Revenues are recognized when cash is received, and expenses are recorded when cash is paid. (See page(s) 140) |
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| Contra account | An account linked with another account and having an opposite normal balance; reported as a subtraction from the other account's balance so that more complete information than simply the net amount is provided. (See page(s) 144) |
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| Correcting entries | Accounting entries made in order to correct errors. (See page(s) 164) |
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| Depreciation | See amortization. (See page(s) 143) |
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| External transactions | Exchanges between the entity and some other person or organization. (See page(s) 138) |
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| Intangible assets | Long-lived (capital) assets that have no physical substance but convey a right to use a product or process. (See page(s) 143) |
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| Interim financial reports | Financial reports covering less than one year; usually based on one-, three- or six-month periods. (See page(s) 140) |
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| Internal transactions | Exchanges within an organization that can also affect the accounting equation. (See page(s) 138) |
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| Market value of an asset | Amount an asset can be sold for. Market value is not tied to the book value of an asset. (See page(s) 144) |
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| Matching principle | The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses. (See page(s) 140) |
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| Prepaid expenses | Items that are paid for in advance of receiving their benefits. These are assets. (See page(s) 141) |
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| Property, plant and equipment | Tangible long-lived assets used to produce goods or services. See capital assets. (See page(s) 143) |
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| Report form balance sheet | A balance sheet that lists items vertically with assets above the liabilities and owner's equity. (See page(s) 155) |
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| Reporting period | See accounting period. (See page(s) 140) |
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| Straight-line amortization method | Allocates equal amounts of an asset's cost to amortization expense during its useful life. (See page(s) 144) |
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| Time period principle | A broad principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years. (See page(s) 139) |
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| Unadjusted trial balance | A listing of accounts and balances prepared before adjustments are recorded and posted to the ledger. (See page(s) 154) |
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| Unearned revenues | Cash received in advance of providing products and services. (See page(s) 145) |