Tutorial3_P_N_ch3.pdf - Financial Accounting Tutorial 3 K S Toudas Financial Accounting P&N Chapter 3 Measuring Business Income Accrual Accounting

Tutorial3_P_N_ch3.pdf - Financial Accounting Tutorial 3 K S...

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Financial Accounting Tutorial 3 K. S. Toudas
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Financial Accounting P&N Chapter 3 Measuring Business Income
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Accrual Accounting Revenues and expenses are recorded in the periods in which they occur rather than in the periods when cash is received or paid 9 Recording revenues when earned 9 Recording expenses when incurred 9 Adjusting the accounts = HOW?
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The Adjustment Process 1 Allocating recorded costs between two or more accounting periods 2 Recognizing unrecorded expenses 4 Recognizing unrecorded earned revenues 3 Allocating recorded unearned revenues between two or more accounting periods Asset Liability Exp n Rev n Balance sheet Income statement
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July 3 3,200 Prepaid Rent Adjustment Illustrated By July 31, half of the prepaid rent has expired and should be treated as an expense Rent Expense Prepaid Rent On July 3, Treadle Website Design paid two months rent in advance, $3,200. The amount was recorded in the Prepaid Rent account.
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