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Financial Accounting Terms Dictionary

U.S. GAAP Codification

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Financial Accounting Terms
Accrual Basis Accounting

U.S. GAAP Codification, Accounting Terms, Accounting Textbooks

Financial Accounting, Intermediate Accounting, Advanced Accounting

Accounting Standards ASC, Accounting by Topic

Accrual Basis Accounting

Accrual Basis Accounting

Cash basis accounting	Cash basis accounting recognizes revenue and expenses when cash is received or paid Under cash basis accounting Revenue recognition: when cash is received Expense recognition: when cash is paid
Accrual basis accounting	Accrual basis accounting recognizes revenue and expenses when services are delivered or received Under accrual basis accounting Revenue recognition: when revenue is earned Expense recognition: when related revenue is recognized
Matching principle	Under accrual basis accounting Expense is recognized in the period when related revenue is recognized This is called the "matching principle" Matching the expense with the related revenue
Accruals and deferrals	Accrual is the recognition of revenue and expenses before cash is received or paid Deferral is the recognition of revenue and expenses after cash is received or paid
Accrued revenue	Accrued revenue is the revenue recognized before cash is received An example of accrued revenue On December 1, 20X1, Entity A loaned $300,000 to another entity Entity A is scheduled to receive $3,000 interest on February 28, 20X2 What is the amount of interest revenue for the period ended December 31, 20X1? Answers Since $3,000 interest covers 3 month period (December - February) Interest earned during the month of December is $1,000 Journal entry on December 31, 20X1 (Debit) Interest receivable 1,000 (Credit) Interest revenue 1,000 Interest receivable is an asset account
Accrued expense	Accrued expense is the expense recognized before cash is paid An example of accrued expense On December 1, 20X1, Entity A rented office space Monthly rent is $5,000 due on the first day of the following month What is the amount of rent expense for the period ended December 31, 20X1? Answers Since $5,000 rent is due on January 1, 20X2, cash will be paid in January 20X2, while rent expense is recognized in December 20X1 Journal entry on December 31, 20X1 (Debit) Rent expense 5,000 (Credit) Rent payable 5,000 Rent payable is a liability account

Accrual Basis Accounting

Deferred revenue	Deferred revenue is the revenue recognized after cash is received An example of deferred revenue On December 1, 20X1, Entity A loaned $300,000 to another entity Entity A received $3,000 interest for three months ending February 28, 20X2 What is the amount of interest revenue for the period ended December 31, 20X1? What is the balance of unearned interest revenue at December 31, 20X1? Answers Since $3,000 interest covers 3 month period (December - February) Interest earned during the month of December is $1,000 Journal entry on December 1, 20X1 (Debit) Cash 3,000 (Credit) Unearned interest revenue 3,000 Journal entry on December 31, 20X1 (Debit) Unearned interest revenue 1,000 (Credit) Interest revenue 1,000 Unearned rent revenue balances At December 1, 20X1 $3,000 At December 31, 20X1 $2,000 = $3,000 - $1,000 Unearned rent revenue is a liability account
Unearned revenue	Unearned revenue is the amount of cash received for the services not provided yet Unearned revenue is a liability account representing the obligation to provide services in the future Unearned revenue balance decreases as services are provided and related revenue is recognized
Deferred expense	Deferred expense is the expense recognized after cash is paid An example of deferred expense On December 1, 20X1, Entity A rented office space and paid $24,000 Monthly rent is $4,000 and $24,000 covers the 6 month period from December 1, 20X1 to May 31, 20X2 Journal entry on December 1, 20X1 (Debit) Prepaid rent 24,000 (Credit) Cash 24,000 Journal entry on December 31, 20X1 (Debit) Rent expense 4,000 (Credit) Prepaid rent 4,000 Prepaid rent expense balances At December 1, 20X1 $24,000 At December 31, 20X1 $20,000 = $24,000 - $4,000 Prepaid rent expense is an asset account
Accrued revenue Accrued expense Deferred revenue Deferred expense	Accrued revenue is an asset account Revenue is recognized before cash is received Cash to be received in the future is an asset account Accrued expense is a liability account Expense is recognized before cash is paid Cash to be paid in the future is a liability account Deferred revenue is a liability account Revenue is recognized after cash is received Cash received in advance is a liability account Deferred expense is an asset account Expense is recognized after cash is paid Cash paid in advance is an asset account

U.S. GAAP by Codification Topic

105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

U.S. GAAP by Topic

Accounting Topics