Chapter_4_Notes

Chapter_4_Notes - Chapter 4 Objectives 1. Learn the meaning...

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Chapter 4 Objectives 1. Learn the meaning and the importance of the Revenue Recognition Principle and Matching Principle . 2. Define and learn the difference between the Cash Basis and the Accrual Basis of Accounting. 3. Learn why Adjusting Entries are necessary and categorize adjusting entries into 4 major groupings . 4. Prepare Adjusting Entries . 5. Describe the Purpose and Prepare an Adjusted Trial Balance . 6. Explain the Purpose and learn how to prepare the Closing Entries necessary after the Financial Statements have been prepared. 7. Review the required steps in the Accounting Cycle .
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Accrual Basis Accounting Follows the Revenue Recognition Principle and the Matching Principle . In other words, Revenue is recognized when it is Earned (not necessarily when received) and Expenses are recognized when the revenue is recognized to which the expense relates . 1. Revenue Recognition Principle An accounting principle that says the Revenue is recognized in the accounting period in which it is Earned. Revenue is Earned when the service is performed or when the product is delivered (usually). 2.
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This note was uploaded on 04/18/2008 for the course BUS 210 taught by Professor Schmeltz during the Spring '08 term at SUNY Stony Brook.

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Chapter_4_Notes - Chapter 4 Objectives 1. Learn the meaning...

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