ch3_summary - Revenue Recognition Matching Concept Revenue...

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1 ACG 2021 Chapter 3 Summary
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Two methods of Accounting Cash Accrual Time-Period Concept Revenue Recognition Principle Matching Concept
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Two types of Accrual Accounting Accruals Transactions recorded before Cash exchanged Deferrals Transactions recorded before Revenue/Expense is  Earned/Incurred Incurred: Make oneself subject to; bring upon oneself;  become liable to That is, you (the corporation) now has an obligation that  will need to be paid
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Deferrals Initial Transaction We Receive Cash in Advance Cash xxxx Unearned Service Revenue  xxxx We pay Cash in Advance Ppd Asset xxxx Cash                   xxxxx Subsequent(Adjusting) Transaction Provide Service or Goods (Earn Revenue) Unearned Revenue xxxx Service Revenue xxxxx Use up Prepaid Asset Expense   xxxxx Ppd Asset xxxxx Balance Sheet Accounts Balance Sheet and Income Statement
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Unformatted text preview: Revenue Recognition Matching Concept Revenue Recognition Matching Concept Accruals • Initial Transaction ▫ Incurred an Expense before paying for it Expense xxxxx Payable xxxxx ▫ We earn Revenue before receiving cash Receivable xxxxx Revenue xxxxx • Subsequent(Adjusting) Transaction • Pay for Expense previously incurred ▫ Payable xxxx Cash xxxx ▫ Receive Cash Owed to us Cash xxxxx Receivable xxxxx B/S & I/S B/S only Closing The Accounts • Permanent Accounts ▫ B/S • Temporary Accounts ▫ Income Statement Revenues closed to Retained Earnings Revenue xxxx ▫ Retained Earnings xxxx Expenses closed to Retained Earnings ▫ Retained Earnings xxxx ▫ Expenses xxxx Ratios • Current ▫ Current Assets / Current Liabilities • Debt ▫ Total Liabilities / Total Assets...
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This note was uploaded on 09/16/2011 for the course ACG 2021 taught by Professor Hornik during the Spring '08 term at University of Central Florida.

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ch3_summary - Revenue Recognition Matching Concept Revenue...

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