Principles of Accounting Week 4
Principles of Accounting Week 4 ACCT-241
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This 1 page Class Notes was uploaded by Mary Catherine on Monday September 19, 2016. The Class Notes belongs to ACCT-241 at Lee University taught by Dr. Sarah A Bumps in Fall 2016. Since its upload, it has received 10 views. For similar materials see Principles of Accounting 1 in Accounting at Lee University.
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Date Created: 09/19/16
Principles of Accounting - Week 4 Matching Concept: matching revenue earned with expenses incurred (it kind of rhymes - easy to remember!) Order of statement completion: INCOME STATEMENT RETAINTED EARNINGS BALANCE SHEET ADJUSTING ENTRIES Accounting Period Concept: requires that revenues and expenses be reported in the proper period Accrual Basis of Accounting - revenues are reported on the income statement in the period in which they are earned (whether or not it has been received) The Accrual Basis of Accounting is included in GAAP (Generally Accepted Accounting Principles) Reasons for an accrual report at the end of a period: - Some expenses are not recorded daily - Some incurrences occur as time passes (instead of an obvious one-time transaction) At the end of a fiscal period, you must make sure that everything is in the correct period and balanced (matching concept) Revenues are earned. Expenses are incurred. There are four types of accounts that typically require adjusting entries: 1) prepaid expenses 2) unearned revenues 3) accrued revenues 4) accrued expenses When we use an asset up, an expense is DEBITED. Examples used: pas 105, 111 (ex.1), 113 (ex. 2), 114, 115 (ex. 7), and 116 (ex. 3-6)
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