Recording credit card expenses after receiving payment

Recording credit card expenses after receiving payment -...

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Recording credit card expenses after receiving payment, as in the example above, is convenient  because a compound journal entry is all that is needed. However, if the sale occurs during one  accounting period and the payment is not received until the next accounting period, an adjusting  entry must be made, if the amount of credit card expense is significant, to prevent the matching  principle from being violated. The matching principle requires that expenses be recognized during 
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Unformatted text preview: the same accounting period as the revenues they help to generate. If the payment in the previous example had not yet been received at the close of an accounting period, the company would make an adjusting entry that debits credit card expense for $30 and credits accounts receivable for $30. Then, after the payment arrives, cash is debited for $970 and accounts receivable is credited for $970....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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