Chapter_4_Notes - Chapter 4 Objectives 1 Learn the meaning and the importance of the Revenue Recognition Principle and Matching Principle 2 Define and

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

This preview shows page 1 - 3 out of 10 pages.

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 Basisand 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 6.Explain the Purpose and learn how to prepare the Closing Entriesnecessary after the Financial Statements have been prepared. 7. Review the required steps in the Accounting Cycle .
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).

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture