UCB UGBA102A Topic03 Slides

UCB UGBA102A Topic03 Slides - Accounting System Accrual...

Info icon This preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Accounting System: Accrual Accounting UGBA102A Introduction to Financial Accounting
Image of page 1

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

View Full Document Right Arrow Icon
UGBA102A Dennis Geyer 2 Cash vs. Accrual Accounting Cash Basis Accounting recognizes revenues & expenses based on the transfer of cash. Net Cash Receipts = Cash Receipts – Cash Disbursements Accrual Basis Accounting recognizes revenues & expenses based on the completion of the earnings process. Net Income = Revenues - Expenses
Image of page 2
UGBA102A Dennis Geyer 3 Recognition & Matching Recognition requires that revenue is recognized only after the seller acquires the right to receive payment from the buyer and is reasonably assured of collection. Matching requires that costs incurred in generating revenues are deducted from those revenues during the same accounting period.
Image of page 3

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

View Full Document Right Arrow Icon
UGBA102A Dennis Geyer 4 Recognizing Revenues 1. Product has been delivered or service has been rendered. 2. Persuasive evidence of an arrangement for customer payment exists. 3. Price is established or determinable. 4. Collection is reasonably assured.
Image of page 4
UGBA102A Dennis Geyer 5 Recognizing Expenses 1. Agreement to purchase goods or services exists. 2. Price is established or determinable. 3. Goods or services have been used to generate revenue.
Image of page 5

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

View Full Document Right Arrow Icon
UGBA102A Dennis Geyer 6 Adjusting Entries Adjusting Entries are journal entries made at the end of an accounting period or at any time financial statements are to be prepared to bring about a matching of revenues and expenses. Deferred Items involve those transactions where cash is paid or received before the using or earning activity occurs. Accrued Items involve those transactions where cash is paid or received after the using or earning activity occurs. Estimated Items involve those transactions where a change in valuation occurs. Generally, these involve the use of contra accounts.
Image of page 6
UGBA102A Dennis Geyer 7 Deferred Items Deferred Revenues (Receive first / Earn later) e.g. Unearned Revenues Deferred Expenses (Pay first / Use later) e.g. Prepaid Rent
Image of page 7

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

View Full Document Right Arrow Icon
UGBA102A Dennis Geyer 8 Accrued Items Accrued Revenues (Earn first / Receive later) e.g. Accounts Receivable Accrued Expenses (Use first / Pay later) e.g. Salaries Payable
Image of page 8
UGBA102A Dennis Geyer 9 Estimated Items Depreciation Accumulated Depreciation Uncollectible Accounts Allowance for Uncollectible Accounts
Image of page 9

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

View Full Document Right Arrow Icon
UGBA102A Dennis Geyer 10 The Accounting Cycle 1. Analyze daily transactions Transaction Analysis 2. Enter daily transactions in database
Image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern