PPT_for_Section_3_without_in-class_assignment

PPT_for_Section_3_without_in-class_assignment - ACC 200...

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Unformatted text preview: ACC 200 Fall 2010 Section 3: The Accrual Basis of Accounting Roby B. Sawyers, CPA, Ph.D. College of Management 2 Primary Topics Accrual Basis When is Revenue recognized? When are expenses recognized? Accruals and Deferrals Accounting for Business transactions using accrual accounting 3 Revenue and Expense Recognition Revenue is recognized when earned (which may be before or after the cash is received!) Expenses are recognized when incurred which may be before or after the cash is paid! Goal is to record expenses in the same period they are incurred to produce revenue 4 Accruals Company has earned revenue or incurred an expense before there has been an exchange of cash Accrued revenue Accrued expense 5 Accrued Revenue Accrued revenue occurs when work is performed or goods are sold before cash is received from a customer Rather than increase cash, the transaction is recorded by increasing accounts receivable (another asset) Revenue (retained earnings) is increased when revenue is earned rather than when cash is received ABC sells a product for $400 in August. The ABC sells a product for $400 in August....
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This note was uploaded on 01/11/2011 for the course ACC 200 taught by Professor Buckless during the Winter '08 term at N.C. State.

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PPT_for_Section_3_without_in-class_assignment - ACC 200...

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