Accounting

Accounting

Storyboard Text

  • The first vocabulary is prepaid expenses. They are future expenses that have been paid in advance.
  • Absolutely!
  • Sure son!
  • Dad, can you teach me the 6 vocabulary words of accrual accounting?
  • So like insurance and taxes?
  • The second one is accrued expenses. They are expenses that have occurred but aren't recorded in the company's general ledger.
  • You are correct!
  • An example would be salaries payable, right?
  • The third one is accrued revenue. This is a sale that has been recognized by the seller, but hasn't been billed to the customer.
  • Exactly!
  • So like interest revenue and accounts recievable?
  • The fourth one is reversing entries. They are created to reverse adjusting entries at the start of the next accounting cycle.
  • Cafe
  • That make sense.
  • The fifth one is unearned revenue. This is a liability account that reports amounts received in advance of providing goods or services.
  • An example of this would be advance rent payments.
  • The last one is deferred revenue, which is money received for goods or services that have not been delivered.
  • Looks like you already knew all of these.
  • Like prepaid insurance policies.
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