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Chapter 2 - AccrualBasis Whenithappens CashBasis Whenpaid...

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Accounting Information Systems
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Accrual Basis When it happens   Cash Basis When paid Mostly Service type business Dentist, Doctor, Lawyers
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1/10 Places an order Record in purchase order file to track what has been requested  and what has been ordered ( managerial)  but not in financial  accounting records. 2/15 Receives desk and bill Record the exchange of assets --you now have the desk and the  cost of the desk, exact amount of the bill. 3/1 Pays the bill Writes a check and sends it to the vendor.
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COST Original Cost-   “Historical”
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Classification   Assets= Liabilities+Stk Equity+Revenue-Expense  Accounts :    Cash, A/R, Supplies, Inventory A/P, Mortgage Payable, X Payable,Unearned X Common Stock, Dividends, Retained Earnings Sales, Services Performed Rent X, Wages X, 
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Chart or List of the Accounts Chart of Accounts- Lists accounts that can be used in recording a business  transaction.  CFO approval to open an account.
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Revenue –  Expenses =  Net Income Who gets the net income? 
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