Unit 4 Balance Day Adjustments

Unit 4 Balance Day - BFA103 – Financial Accounting and Decision Making 2 nd Semester 2009 School of Accounting& Corporate Governance School of

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Unformatted text preview: BFA103 – Financial Accounting and Decision Making 2 nd Semester 2009 ___________________________________ School of Accounting & Corporate Governance School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making Unit 4 Balance Day Adjustments ___________________________________ 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. ___________________________________ School of Accounting & Corporate Governance BFA103 Financial Accounting & Decision Making References: Atrill, McLaney, Harvey & Jenner. Chapters 3, 4 and 5 ___________________________________ 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 ___________________________________ 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 ___________________________________ 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 . ___________________________________ 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. ___________________________________ 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 ___________________________________ 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 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). ___________________________________ 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 ___________________________________ School of Accounting & Corporate Governance...
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This note was uploaded on 04/30/2011 for the course ECONOMIC 0053665 taught by Professor Allen during the Spring '10 term at American Baptist.

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Unit 4 Balance Day - BFA103 – Financial Accounting and Decision Making 2 nd Semester 2009 School of Accounting& Corporate Governance School of

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