Journal entries made at the end of an accounting period to update accounts before preparing financial statements. These ensure revenues are recorded when earned and expenses when incurred. Common examples: accrued wages, prepaid insurance expiring, depreciation.
The complete sequence of steps a company takes to record, process, and report financial transactions during one accounting period. It's like the orbit of the Earth: it starts, completes a full rotation, and then starts again.
A system that records revenue when it's earned and expenses when they're incurred—regardless of when cash changes hands. It's like using a credit card: the purchase happens today even if you pay the bill next month.
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