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Chapter 3 - Chapter 3 Accrual Accounting Concepts Basic...

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Chapter 3: Accrual Accounting Concepts
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Basic Accrual Accounting Concepts Transactions… are recorded as they occur. are recorded even if cash is not paid or received. affect the accounting equation (A=L+OE).
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Meaning of Accrual Revenue is recognized (recorded) when earned. Expenses are recognized (recorded) when paid. Does not have to be received or paid in CASH.
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Matching Principle When revenues are earned and recorded, all expenses incurred in generating the revenues must also be recorded. Matching subtracts expenses incurred from revenues earned to arrive at Net Income or Net Loss.
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Family Health Care, P.C. Earns revenue when services are provided to patients. Earnings process is complete. Patient is obligated to pay. Incurs expenses to generate revenue. Recognizes expenses according to the Matching Principle .
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Family Health Care, P.C. Unearned Rent Revenue Family Health Care, P.C. receives a rent payment for use of its land in advance.
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Family Health Care, P.C.
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