Assignment #2

Assignment #2 - 1 Accural accounting recognize revenues...

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1 2 3 4 7 12 13 20 21 23 24 Accural accounting recognize revenues before cash is exchanged. Under accural accounting, a business would recognize the revenue in 2010 (the period in which it performed the services) even though it does not collect (realize) the cash until 2011. Recognition means formally reporting an economic item or event in the financial statements. It is independent of collecting or paying cash because it a company recognizes revenue in a income statement from a different accounting period and make payments based on the numbers that they show they "will have." Deferral describes an earnings event that is recognized after cash has been exchanged. A company will use revenue from a previous year to purchase supplies for the following year. This is considered a deferral event and the associated revenue will be recognized when the work is done. The recognition of revenue increases the account receivables and assets however the cash flows will not be effected until the future when the cash is collected. Unearned revenue is revenue for which cash has been
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This note was uploaded on 08/28/2011 for the course BUS 600 taught by Professor Thomas during the Spring '11 term at Morehead State.

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Assignment #2 - 1 Accural accounting recognize revenues...

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