An accounting period is a standardized time frame for tracking and reporting a company's financial performance and tax obligations. Commonly used in financial statements, accounting periods are vital for consistency and comparison.
Accounting profit refers to the amount of profit calculated using generally accepted accounting principles (GAAP) rather than tax rules. It represents the revenue for an accounting period less the expenses incurred, utilizing the concept of accrual accounting. There are several theoretical and practical challenges in determining this profit, leading to a certain variability in its measure.
A system of accounting in which revenue is recognized when it is earned and expenses are recognized as they are incurred, providing a more accurate picture of a company's financial status across different periods.
In accounting, to accrue means to record an expense or revenue in the company’s financial statements even if no cash transactions have taken place. Accrued items include revenues earned or expenses incurred but not yet received or paid.
Accrued interest or accrued income refers to interest or other income that has been earned but not yet received by the entity. It accumulates periodically and is recorded in the financial statements as interest receivable or accrued income.
Accrued liabilities are expenses that a company has recognized in the books before it has paid them. This concept is integral to the accrual method of accounting which emphasizes recognizing economic events regardless of cash transactions.
Accrued revenue refers to revenue that has been earned by a company but has not yet been recorded in the accounts because the corresponding invoice has not been sent or payment has not been received. It is considered an asset on the balance sheet.
Adjusting entries are made at the balance-sheet date under an accrual accounting system to ensure that the income and expenditure of a business are included in the correct period. Examples include adjustments for depreciation, prepayments, accruals, and closing stock.
An Adjusting Journal Entry (AJE) is an entry made in an accounting journal to allocate income or expenses to the period in which they actually occurred, typically as a part of the end-of-period adjustments to the financial statements.
Adjusting Journal Entries (AJEs) are accounting entries made to a company’s general ledger at the end of an accounting period to ensure that revenues and expenses are recorded in the period in which they occur. These entries are essential for complying with the matching principle and accrual accounting methods.
Deferred income, also known as unearned revenue or deferred revenue, refers to payments received by a business for goods or services that have yet to be delivered or completed.
Hybrid Accounting Methods are those accounting practices that incorporate elements from both cash and accrual accounting methods to better reflect a taxpayer's income. Used when authorized by the Treasury Regulations, and if consistently applied.
The balance of an item of expenditure that has not yet been written off to the profit and loss account, representing the value of goods or services that will provide future economic benefits.
