cashbasisaccountingACC200

cashbasisaccountingACC200 - not when cash is exchanged...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
OBJECTIVES – THE CASH BASIS OF ACCOUNTING Describe the cash and accrual bases of accounting Describe the revenue recognition and matching principles Use the cash basis of accounting to analyze, record and summarize transactions for a business Use the cash basis of accounting to prepare financial statements (income statement, balance sheet and retained earnings statement) Describe the advantages and disadvantages of the cash basis of accounting
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ACCOUNTING CONCEPTS Time Period Assumption Revenue Recognition Principle Matching Principle
Background image of page 2
CASH VERSUS ACCRUAL ACCOUNTING Cash-basis Accounting Accounting events (transactions) are recorded when cash is exchanged Revenue recorded when cash received Expenses recorded when cash is paid Accrual-basis Accounting Accounting events (transactions) are recorded when the occur
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: not when cash is exchanged Revenues recorded when earned (revenue recognition principle) Expenses recorded when incurred or when related revenue is recognized (matching principle) Cash Basis - Accounting Steps Analyze & record cash transactions Compute account balances Prepare financial statements ACCOUNTING EQUATION Assets Liabilities Owner’s Equity = + Contributed Capital Retained Earnings Revenues Expenses Dividends Advantages and Disadvantages of Cash Basis of Accounting Advantages Simplicity of measuring and identifying business events/transactions Net Income from Operations same as Net Cash from Operations Disadvantage Mismatch of revenues with expenses...
View Full Document

This note was uploaded on 04/21/2009 for the course ACC 200 taught by Professor Buckless during the Spring '08 term at N.C. State.

Page1 / 6

cashbasisaccountingACC200 - not when cash is exchanged...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online