accrual accounting - AccrualAccounting Dr.JamesGong...

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

View Full Document Right Arrow Icon
Click to edit Master subtitle style Accrual Accounting Dr. James Gong
Image of page 1

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

View Full Document Right Arrow Icon
Today’s Agenda n Case 1 discussion n Accrual accounting
Image of page 2
n Revenues are  “recognized”  (recorded) as soon as they are both: n Earned , meaning the seller has performed a service or  conveyed an asset to the buyer; n Measurable , meaning the value to be received for that service  or asset is reasonably assured and can be measured with a  high degree of reliability. n Expenses are  expired  costs —the assets used up to produce  revenues—and are recorded in the same accounting period in  which the revenues are recognized. Expenses are  “matched  to  Accrual Accounting
Image of page 3

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

View Full Document Right Arrow Icon
Understanding Accrual  Accounting n Accrual accounting decouples measured earnings (i.e.,  revenues minus expenses) from the amount of cash  generated from operations. n Accrual accounting revenues generally do not  correspond to cash receipts for the period, nor do  accrual expenses always correspond to cash outlays  for the period. n Accrual accounting can produce large discrepancies  between measured earnings and the amount of cash 
Image of page 4
Practice Problem n In January 2008, Canterbury sells a three-year subscription  to its quarterly magazine to 1,000 customers. n Customers pay the full subscription price ($300 = 12 x $25)  up front.
Image of page 5

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

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern