ACC 290 Week 2 Summary
ACC 290 Week 2 Summary
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This 0 page Study Guide was uploaded by Experthelper Notetaker on Wednesday November 11, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 21 views.
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Date Created: 11/11/15
S u m ma ry Week 2 Summary In week two I learned that accrual accounting is an accounting method that evaluates the performance of the organization by financial events without regard to when the transaction actually occurs These financial events are identified by matching the revenues to the expenses at the time in which the transaction takes place rather than when the payment is made received I learned that the revenue recognition principle requires that organizations recognize their revenue during the accounting time period that it is earned not necessarily received I learned that adjusting entries was necessary so that revenue and expense recognition principles are complied with and that adjustments occur because events are not always recorded daily some costs expire over time or because a service has not yet billed Each time a financial statement is prepared entries must be adjusted to assure that all the financial information is uptodate There are two types of adjusting entries accruals and deferrals Accruals are accrued revenues and accrued expenses An example of accrued revenue is when the painter is paid ahead of time and has not performed the job of painting yet Deferrals include prepaid expenses and unearned revenues An example of prepaid expenses is when an insurance policy is paid in full for a six month period and has not yet used each month that is paid for Finally I learned that the trial balance is prepared when the ledger accounts have been balanced at the end of the specific accounting period The trail balance helps identify errors that might have been made when posting and journalizing The trail balance does not tell you that ledger is correct Some transactions may not have been posted been posted repeatedly amounts could be incorrect or some posts may be incorrect and not be realized The purpose of the adjusted trail balance is to make sure that the total amount of debit balances in the general ledger equals the total amount of credit balances References A verkamp HE 2011 Accounting basics Accounting Coach LLC Retrieved from httpblOgaccountingcoachcomdebtratio Kimmel P D Weygandt J J amp Kieso D E 2011 Financial accounting Tools for business decision making 6th ed Hoboken NJ John Wiley amp Sons
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