Chapter_4 - – Never ever never will an adjusting entry...

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The Adjustment Process and Financial Statements Chapter 4
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The Accounting Cycle Time line Start of fiscal yr end of fiscal yr after fiscal yr end Balance sheet carry over prep. Trial balance prep. Adjusting entries Income statement 0 prep. Financial statements Closing entries Selection of Fiscal Year Companies gets to select their fiscal years Trial Balance
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Adjusting Entries Deferred Revenues / Expenses Cash is received before the revenue is earned Accrued Revenues / Expenses Cash is received after the revenue is earned Common Feature Affect at least one income statement account (revenue/ expense) asset of liability
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Unformatted text preview: – Never ever never will an adjusting entry include the account cash Adjusting Entries December 31 Cash received Revenue earned Deferred Revenue/Expense Cash paid Expense incurred Accrued Revenue/ Expense Revenue Earned Cash Rec’d Expense incurred Cash paid Adjusting Entries • Judgements and Estimates • Errors in Estimates • Management Incentives Profitability Ratios • Earnings per Share • Net Profit Margin = Net Income Net Sales • ROE = Net Income Average Shareholders’ Equity • Net income / number of shares outstanding...
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This note was uploaded on 04/02/2010 for the course AFM AFM 101 taught by Professor Kennedy during the Fall '09 term at Waterloo.

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Chapter_4 - – Never ever never will an adjusting entry...

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