Chapter 3 Presentation-Spring 10 BB

Chapter 3 - CHAPTER3 AdjustingAccounts AFewKeyTerms : incurred(Matching Cashbasisaccounting: isreceivedandrecor

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 2/2/11 CHAPTER 3 Preparing Financial Statements
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 2/2/11 Accrual basis accounting uses the adjusting process to  recognize revenues when earned and expenses when  incurred (Matching) Cash basis accounting recognizes revenues when cash  is received and records expenses when cash is paid  (NOT  GAAP) A Few Key Terms
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 2/2/11 Deferrals:  Prepaid (Deferred) Expenses : items paid for in advance  of receiving their benefits. Once  asset  (prepaid expense)  is used, costs become expenses. Unearned (Deferred) Revenues : cash received in  advance of providing products and services.    Liability    becomes revenue as company fulfills obligation of its  services.  Adjustments 
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 2/2/11 Accruals: Accrued Expense : costs that are incurred in a period but  are both unpaid and unrecorded. (Expenses incurred, not  yet paid) Accrued Revenue : revenues earned in a period that are  both unrecorded and not yet received in cash (other  value)
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 2/2/11 Closing Process Closing Process At the end of an accounting period  after  financial  statements have been completed. Prepares accounts for recording the transactions and the  events of the  next  period Why? 1.
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This note was uploaded on 02/01/2011 for the course ACCT 203 taught by Professor Hylton during the Fall '08 term at George Mason.

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Chapter 3 - CHAPTER3 AdjustingAccounts AFewKeyTerms : incurred(Matching Cashbasisaccounting: isreceivedandrecor

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