Phillips Chap 3 class slides

Phillips Chap 3 class slides - 3-1RevenuesIncreases in...

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Unformatted text preview: 3-1RevenuesIncreases in resources (cash or AR) from sales of goods or services to customers.3-2EXPENSESCosts that result when resources are sacrificed (i.e., assets used up or liability incurred) to generate revenues.3-3Peripheral transactions are normal but not central to the core operating activities of the businessGains(core revenue) occur when assets are sold for amounts greater thanwhat they are recorded.Losses=> assets sold for less than they are recorded.Income Tax expenseis reported separately 3-4Records Revenues when cash is ReceivedRecords Expenses when cash is paid.Cash Basis Accounting3-5Accrual Basis AccountingRecord Revenueswhen they are Earnedregardless of when cash received.RecordExpenseswhen they are Incurred regardless of when cash is paid.3-6Revenuesare Earnedwhen goods or services are provided to customers at a determined price and with reasonable assurance of collection.Expensesare Incurredwhen the economic benefits of an item are used up in the current period.3-7=++ Increases Decreases -- Decreases Increases +- Decreases Increases +AssetsLiabilitiesStockholders' EquityDebitCreditDebitCreditDebitCreditDebit = LeftCredit = RightAsset accounts increaseincreaseon the left or debitdebitside and decreasedecreaseon the right or creditcreditside.Liability accounts increaseincreaseon the right or creditcreditside and decreasedecreaseon the left or debitdebitside.Stockholders equity accounts increaseincreaseon the right or creditcreditside and decreasedecreaseon the left or debitdebitside.3-8DebitCreditDebitCreditDebitCreditDebitCreditStockholders Equity Accounts.3-9Sales for CashCash is received in the same period the company delivers goods/services.dr. Cashcr. Service Revenue$Assets=Liabilities+Stockholders' EquityCash +Revenue (R) +3-10Credit SaleCash is received afterthe company delivers goods/services....
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This note was uploaded on 04/30/2011 for the course MBA 819 taught by Professor Mcmillan during the Fall '10 term at Clemson.

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Phillips Chap 3 class slides - 3-1RevenuesIncreases in...

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