Class _4,5-Accrual Accounting

Class _4,5-Accrual Accounting - AccrualAccounting &...

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Accrual Accounting Matching Concept Accrual Accounting -  Accruals - recognize an earnings event before cash is exchanged Deferrals - recognize an earnings event after cash is exchanged NOTE:  a "Cost" might be either an asset or an expense Requires  companies to recognize revenue in the period in which the work  is done regardless of when cash is collected and to MATCH expenses  incurred to earn that revenue regardless of when cash is paid (Matching  Concept) Conservatism-guides accountants to select the alternative that produces  the lowest amount of net income Period Costs - Expenses that are matched with the period in which they  are incurred - a Cost is an asset if it has not yet consumed a purchased  resource in the process of earning revenue (Examples: Prepaids,  Inventory) - a Cost is an expense if it has consumed a purchased resource  in the process of earning revenue  Remember:   Revenue represents a benefit to the company that results in an increase in  assets or a decrease in liabilities from providing goods and services to  customers (operating activities) Expenses represent a decrease in assets or an increase in liabilities  resulting from operating activities undertaken to generate revenue
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Accruals Cash Received AFTER Work Performed/Expense Incurred Accruals: Accrued Revenues: Revenues earned, but cash not yet received (Asset Accounts) Examples: Example: Accrued Expenses: Expenses or costs incurred, but not yet paid (Liability Accounts) Examples: Accrued Salaries, Accrued Rent, etc. Interest Payable - Interest owed on an Account Payable or Note Payable
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This note was uploaded on 02/10/2011 for the course ACC 201 taught by Professor Cromartie during the Spring '11 term at UNC Greensboro.

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Class _4,5-Accrual Accounting - AccrualAccounting &...

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