acct 211 - Ch4 notes

acct 211 - Ch4 notes - Ch. 4 Notes (Page 1) ACCRUAL BASIS...

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Ch. 4 Notes (Page 1) ACCRUAL BASIS OF ACCOUNTING (ACCRUAL ACCOUNTING) : all revenues are recorded in accounting records when earned all expenses are recorded when incurred MATCHING CONCEPT : to calculate a profit: must compare the revenues earned from providing products/services to all the expenses incurred from providing those products/services expenses are “matched” against the revenues they generate ADJUSTING ENTRIES : some accounts will have to be updated at the end of the accounting period to show correct revenues and expenses entries are adjusted when the revenues or expenses affect more than one accounting period after entries are adjusted -- an adjusted trial balance can be made Every adjusting entry involves a change in either - a revenue or an expense (income statement account) AND - an asset or liability (balance sheet account) TYPES OF ADJUSTING ENTRIES : 1. converting asset to an expense 2. converting a liability to a revenue 3. accruing unpaid expenses
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acct 211 - Ch4 notes - Ch. 4 Notes (Page 1) ACCRUAL BASIS...

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