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Unit 4 Balance Day Adjustments

Unit 4 Balance Day Adjustments - School of Accounting...

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BFA103 – Financial Accounting and Decision Making 2 nd Semester 2009 ___________________________________ School of Accounting & Corporate Governance
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Unit 4 Balance Day Adjustments ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Objectives: For students to be able to: record balance day adjustments in the worksheet; prepare final reports incorporating balance day adjustments. ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making References: Atrill, McLaney, Harvey & Jenner. Chapters 3, 4 and 5 ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Calculating Profit Matching Process The matching of revenue earned against expenses incurred for a particular accounting period ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making The Balance Day Adjustments to be covered in this unit are: Prepaid Expenses Accrued Expenses Prepaid Revenue Accrued Revenue Depreciation Doubtful debts ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Prepaid Expenses Prepaid expenses are those items that are paid for before they have been used . ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Lecture Illustration 4.1 A 12 month insurance policy for $1,200 was paid in advance on 1st April 2009. Balance Day is 30th June 2009. ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Insurance paid for the year is $1,200 Insurance expense incurred for the year is $300 Insurance paid in advance to be used next year is $900 ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making ___________________________________ Worksheet Assets = Liabilities + Proprietorship Date Bank Prepaid Ins Profit & Loss 2009 April 1 1,200 1,200 June 30 (300) (300) Insurance Exp 900
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Accrued Expenses Accrued expenses are expenses that have been incurred in the accounting period but not yet paid for (recorded). ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Lecture Illustration 4.2 Advertising has been paid up to 1st May for $2,000. A 3-month advertising contract for $1,500 commenced on 1st May and payment is not due until the end of the contract. Balance Day is 30th June ___________________________________
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School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Advertising paid for the year is $2,000.
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