Chapter 3 Notes

Chapter 3 Notes - -Accumulated depreciation is a contra...

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Chapter 3 Notes: Adjusting the Accounts -GAAP requires accrual basis accounting (transactions recorded when they occur not when cash is received) -Many small businesses do not need to follow GAAP and use cash-basis accounting (not in accordance with GAAP) -Adjusting entries=accurate reporting -Deferrals (cash is before event) -prepaid expenses -unearned revenues -Accruals (event before cash) -accrued revenues -accrued expenses -Depreciating Asset: debit depreciation expense, credit accumulated depreciation
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Unformatted text preview: -Accumulated depreciation is a contra asset account (D- CR+)-Book value, unexpired cost, carrying value: difference between the cost of any depreciable asset and its related accumulated depreciation-Face value of note * annual interest rate * time in terms of a year=Interest-Adjusting entries dont involve cash-Adjusted trial balance:-balance sheet-income statement-retained earnings statement-*NOT REQUIRED TO PRODUCE STATEMENT OF CASH FLOW...
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