UCB UGBA102A Topic03 Slides

UCB UGBA102A Topic03 Slides - Accounting System: Accrual...

Info iconThis 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
Background image of page 1

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

View Full DocumentRight 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
Background image of page 2
UGBA102A Dennis Geyer 3 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.
Background image of page 3

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

View Full DocumentRight 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.
Background 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.
Background image of page 5

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

View Full DocumentRight 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.
Background 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
Background image of page 7

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

View Full DocumentRight 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
Background image of page 8
UGBA102A Dennis Geyer 9 Estimated Items Depreciation Accumulated Depreciation Uncollectible Accounts Allowance for Uncollectible Accounts
Background image of page 9

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

View Full DocumentRight Arrow Icon
UGBA102A Dennis Geyer 10 The Accounting Cycle 1. Analyze daily transactions Transaction Analysis 2. Enter daily transactions in database Data Entry 3. Prepare a trial balance at end of period Trial Balance 4. Analyze & enter adjusting entries Adjusting Entries 5. Prepare an adjusted trial balance Adjusted Trial Balance 6. Prepare financial statements Financial Statements 7. Analyze & enter closing entries Closing Entries 8. Prepare post-closing trial balance Post-Closing Trial Balance
Background image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 35

UCB UGBA102A Topic03 Slides - Accounting System: Accrual...

This preview shows document pages 1 - 11. Sign up to view the full document.

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