Accounting Ch.4

Accounting Ch.4 - 1 4-1 Financial Accounting: Tools for...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 4-1 Financial Accounting: Tools for Business Decision Making, 4th Ed. Kimmel, Weygandt, Kieso CHAPTER 4 4-2 Chapter 4 Accrual Accounting Concepts Explain the revenue recognition principle and the matching principle. Differentiate between the cash basis and the accrual basis of accounting. Explain why adjusting entries are needed and identify the major types of adjusting entries. Prepare adjusting entries for prepayments. 4-3 Chapter 4 Accrual Accounting Concepts Prepare adjusting entries for accruals. Describe the nature and purpose of the adjusted trial balance. Explain the purpose of closing entries. Describe the required steps in the accounting cycle. 4-4 Time Period Assumption... Divides the economic life of a business into artificial time periods WHY? to provide immediate feedback on how the business is doing. 11 1 2 4-5 Time Period Assumption... Generally a month, a quarter, or a year. An accounting time period that starts on January 1 and ends December 31 is called a calendar year. An accounting time period that is one year long is called a fiscal year. 4-6 Revenue Recognition Principle... Dictates that revenue be recognized in the accounting period in which it is earned. Is considered earned when the service has been provided or when the goods are delivered. 4-7 NOT THAT FUNNY 4-8 Matching Principle... Requires that expenses be recorded in the same period in which the revenues they helped produce are recorded. 2 4-5 Time Period Assumption... Generally a month, a quarter, or a year. An accounting time period that starts on January 1 and ends December 31 is called a calendar year. An accounting time period that is one year long is called a fiscal year. 4-6 Revenue Recognition Principle... Dictates that revenue be recognized in the accounting period in which it is earned. Is considered earned when the service has been provided or when the goods are delivered. 4-7 NOT THAT FUNNY 4-8 Matching Principle... Requires that expenses be recorded in the same period in which the revenues they helped produce are recorded. 3 4-9 Review a. Cost Principle. b.Matching Principle c. Periodicity Principle d.Revenue Recognition Principle Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)? 4-10 Review a. Cost Principle. b.Matching Principle c. Periodicity Principle d.Revenue Recognition Principle Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)? 4-11 When would revenue be recorded for the following scenario . . . Ad agency is hired for a project in May, does the work in June and is paid in July? June Review 4-12 Review When would expenses be recorded for this companion scenario ?...
View Full Document

This note was uploaded on 09/12/2011 for the course ECON 3A taught by Professor Loster during the Spring '07 term at UCSB.

Page1 / 19

Accounting Ch.4 - 1 4-1 Financial Accounting: Tools for...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online