Question: Revenue Principle

Answer: If cash is received before company delivers goods/services- unearned revenue

Question: Accounts Receivable

Answer: If cash is received after the company delivers goods/services ex) interest receivable, rent receivable, royalties recievable. Asset account

Question: Expense Matching Principle

Answer: costs incurred to generate revenues be recognized in the same period— match all costs with their benefits

Question: prepaid expense

Answer: if cash is paid before the company received goods/services, an asset account

Question: accounts payable

Answer: liability account. If cash is paid after the company receives goods or services

Question: Corporation

Answer: incorporated under state law, limited liability-leaders of company are not legally liable, audited

Question: The Accounting System

Answer: A=L+SE. A system that collects and processes financial information about a business entity and reports that information to decision makers. Both financial and managerial accounting

Question: balance sheet

Answer: reports the amount of assets, liabilities, and stockholder’s equity of an accounting entity at a point in time

Question: Examples of expenses

Answer: costs of goods sold, wages expense, rent expense, interest expense, depreciation expense, advertising expense, insurance expense, repair expense, income tax expense

Question: income statement

Answer: revenue-expenses=net income