ACCT1110 notes.docx - Week 2 The accounting cycle The accounting equation Debits and credits Week 3 Learning objectives 1 Differentiate between the cash

ACCT1110 notes.docx - Week 2 The accounting cycle The...

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Week 2 The accounting cycle The accounting equation Debits and credits
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Week 3 Learning objectives 1. Differentiate between the cash basis and the accrual basis of accounting. 2. Explain criteria for revenue recognition and expense recognition. 3. Explain why adjusting entries are needed and identify the major types of adjusting entries. 4. Prepare adjusting entries for prepayments and accruals. 5. Describe the nature and purpose of the adjusted trial balance. 6. Explain the purpose of closing entries. 7. Describe the required steps in the accounting cycle. 8. Describe the purpose and the basic form of a worksheet. Accrual Basis Records business transactions when they occur - When sale is made - When bill is received Presents accurate financial picture Cash Basis Records transactions only when cash is received or paid - When customer pays for product or service - When bills are paid Only used by very small businesses Omits important info Revenue recognition criteria Revenue should be recognized in the accounting period in which the service is performed or the goods are delivered.
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  • '19
  • Debbie Jeffrey

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