ACCTG 215 Notes 1-13
ACCTG 215 Notes 1-13 ACCTG 215
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This 1 page One Day of Notes was uploaded by Shogo Okuda on Tuesday October 28, 2014. The One Day of Notes belongs to ACCTG 215 at University of Washington taught by Wells in Winter2010. Since its upload, it has received 123 views. For similar materials see Introduction to Accounting and Financial Reporting in Accounting at University of Washington.
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Date Created: 10/28/14
ACCTG 215 Notes 111 Chapter 2 External transactions transactions the rm conducts w a separate economic entity such as selling products to a customer purchasing supplies from a vendor paying salaries to the employee and borrowing money from a bank Internal transactions events that affect the nancial position of the company but do not include an exchange w a separate economic entity Chart of accounts list of all account names used to record transactions to a company 6 steps 1 Identify accounts by an external transactions Analyze the impact of the transaction on the accounting equation Assess whether the transaction results in a debit or a credit to the account balance Record the transaction Post the transaction to the T account in the general ledger Prepare a trial balance quot39gtquot Each Transaction will have a dual effect Chapter 3 Accrualbasis accounting record revenues when we earn them the revenue recognition principle and expenses w related revenues the matching principle Revenue recognition principle we record revenue in the period in which we earn it not necessarily in the period in which we receive cash Matching principle we recognize expenses in the same period as the revenues they help to generate sometimes it is impossible to tell when revenues will occur ex Ads not necessarily when we pay cash Cashbasis accounting record revenues at the time we receive cash and expenses at the time we pay cash BC Cashbasis accounting violates both the revenue recognition principle and the matching principle it is generally not accepted in preparing nancial statements Difference between accrual basis accounting and Cashbasis accounting is timing Adjusting entries record events that have occurred but that we have not yet recorded Prepayents Prepaid expenses we paid cash or had an obligation to pay cash for the purchase of an asset before we incurred the expense Unearned revenues we received cash and recorded a liability business we earned the revenue Accruals Accrued expenses we paid cash after we incurred the expense and recorded a liability Accrued revenues we received cash after we earned the revenue and recorded an asset Prepaid Expenses costs of assets acquired in one period that will be expensed in a future period The adjusting entry for a prepaid expense always includes a debit to an expense account and a credit to an asset account