Acc200Day05 - Accy 200 Accy Day 5 Peter A. Silhan Agenda...

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Accy 200 Accy 200 Day 5 Peter A. Silhan
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Agenda Agenda Accrual Accounting: Cash-Timing Effects Key Transaction: (1) cost of goods sold, along with (2) sales revenue
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Accrual Accounting: Accrual Accounting: Cash-Timing Differences Cash-Timing Differences (accruals, deferrals, etc) (accruals, deferrals, etc) Early Late Cash outflow Cash inflow (c) disburse CASH; create asset; later recognize expense (d) recognize expense; create liability; later pay CASH (b) recognize revenue ; create asset; later receive CASH (a) receive CASH ; create liability; later recognize revenue pas 2005 “recognition”
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Timing Differences Timing Differences Customer pays “Early” Dr Cash Cr Unearned Income We pay “Early” Dr Supplies Cr Cash Customer will pay “Later” Dr Accounts Receivable Cr Sales We will pay “Later” Dr Expense Cr Accounts Payable
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( ( a) a) Early Early Cash i Cash i nflow nflow : we : we will will recognize recognize revenue revenue later later Examples Include: Airline Ticket Sales Sport Season Tickets
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This note was uploaded on 10/16/2010 for the course ACCY Accy 200 taught by Professor Xxx during the Spring '10 term at University of Illinois at Urbana–Champaign.

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Acc200Day05 - Accy 200 Accy Day 5 Peter A. Silhan Agenda...

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