Module 7 Slides.pptx - Module 7 Cash vs Accrual Accounting...

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Income Tax Fundamentals 2019
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Chapter 7 / Exercise 7.2
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
Module 7
We have textbook solutions for you!
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Income Tax Fundamentals 2019
The document you are viewing contains questions related to this textbook.
Chapter 7 / Exercise 7.2
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
Cash vs. Accrual Accounting
Accrual accounting recognizes revenues as they are earned, not necessarily when cash is received.Expenses are recognized as they are incurred, not necessarily when cash is paid.Provides a better basis for financial reporting, according to the FASB.Accrual Accounting
Double-entry Accounting
Double-entry accounting is an old and universally accepted system for recording accounting data.Each transaction is recorded in a way that maintains the equality of the basic accounting equation:The effects of transactions are recorded in accounts. Under double-entry accounting, each transaction affects at least two accounts.Assets = Liabilities + Owners’ EquityIntro to Double Entry Accounting
Accounting Terminology
Chart of AccountsWhen we speak of “account,” don’t think “bank account.” An “account” is a collection of transactions that affect the same item on the income statement or balance sheet. Jim Jones Accounting FirmChart of Accounts101 - Cash105 - Accts Receivable110 - Office Supplies150 - Equipment201 - Accounts Payable210 - Wages Payable305 - Common Stock320 - Retained Earnings401 - Consulting Fees410 - Tax Return Preparation Fees501 - Lemon Expense505 - Wages Expense510 - Office Expense
A debitis an entry on the left side of an account.A creditis an entry on the right side of an account.T-AccountsDebitCredit[Name of the impacted account]
Background image
T-ACCOUNT CHEAT SHEET
The Accounting Cycle
The Accounting Process1.Business documents are analyzed.2.Prepare a T-account for the transaction.3.Transactions are recorded in the general journal (in chronological order).

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