Matching Definitions with Terms
Match each definition with its related term by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions thanterms).

Transcribed Image Text:

Term Definition (1) Expenses (2) Gains (3) Revenue principle (4) Cash basis accounting A. Report the long life of a company in shorter periods. B. Record expenses when incurred in earning revenue. C. The time it takes to purchase goods or services from sup- pliers, sell goods or services to customers, and collect cash from customers. (5) Unearned revenue (6) Operating cycle (7) Accrual basis accounting (8) Prepaid expenses (9) Revenues – Expenses = D. Record revenues when earned and expenses when incurred. E. Increases in assets or decreases in liabilities from peripheral transactions. F. An asset account used to record cash paid before expenses have been incurred. G. Record revenues when earned and measurable (delivery of goods or services has occurred, there is persuasive evidence of an arrangement for customer payment, the price is fixed or determinable, and collection is reasonably assured). Net Income (10) Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Declared H. Decreases in assets or increases in liabilities from peripheral transactions. I. Record revenues when received and expenses when paid. J. The income statement equation. K. Decreases in assets or increases in liabilities from ongoing operations. L. The retained earnings equation. M. A liability account used to record cash received before revenues have been earned.