Chapter 3 for course website

Paid chapter three slide 34 of 74 when to recognize

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ese costs with the revenues generated. Examples: Period costs (costs not directly linked to product or service) We record these costs as and when they occur Examples: Chapter Three Slide 35 of 74 Matching Principle Introduction To Financial Accounting HKUST When cash is paid on the date the expense is incurred, the following entry is made: Expense Incurred AND $ Paid Rent expense (+E, -SE) Cash (-A) x,xxx x,xxx Chapter Three Slide 36 of 74 Matching Principle Introduction To Financial Accounting HKUST If cash is paid before the company receives goods or services, an asset account PREPAID EXPENSE i recorded. is d d Cash is paid before expense is incurred $ Paid Prepaid rent expense (+A) x,xxx Cash (-A) x,xxx Expense Deferral Chapter Three Slide 37 of 74 Matching Principle Introduction To Financial Accounting HKUST If cash is paid before the company receives goods or services, an asset account PREPAID EXPENSE i recorded. is d d Cash is paid before expense is incurred $ Paid Prepaid rent expense (+A) x,xxx Cash (-A) x,xxx Expense Incurred Accruals reverse. x,xxx x,xxx Slide 38 of 74 Rent expense (-R, -SE) Prepaid rent expense (-A) Chapter Three Matching Principle Introduction To Financial Accounting HKUST Typical assets and their related expense accounts include. . . as used over time becomes CASH PAID FOR Supplies S li Prepaid insurance Buildings and equipment EXPENSE Supplies expense S li Insurance expense Depreciation expense Chapter Three Slide 39 of 74 Matching Principle Introduction To Financial Accounting HKUST If cash is paid after the company receives goods or services a liability PAYABLE is recorded. services, recorded Cash paid after expense is incurred Expense Incurred Wages expense (+E, -SE) Wages payable (+L) Expense Accrual Chapter Three x,xxx x,xxx Slide 40 of 74 Matching Principle Introduction To Financial Accounting HKUST If cash is paid after the company receives goods or services a liability PAYABLE is recorded. services, recorded Cash paid after expense is incurred Expense Incurred $ Paid Accruals reverse. x,xxx Wages payable (-L) Cash (-A) Chapter Three Wages expense (+E, -SE) Wages payable (+L) x,xxx x,xxx x,xxx Slide 41 of 74 Matching Principle Introduction To Financial Accounting HKUST Typical liabilities and their related expense accounts include . . . and already incurred as CASH TO BE PAID Salaries payable Interest payable Property taxes payable EXPENSE Salaries expense Interest expense Property tax expense Chapter Three Slide 42 of 74 Expense Recognition Introduction To Financial Accounting HKUST The following transactions occurred in Jan, 2012. For each transaction, if an expense is to be recognized in Jan, indicate the expense account title and amount. If not recognized, indicate why. a. b. c. d. Dell pays its computer service technicians $79,500 in salaries for the two weeks ended January 7. Answer from Dell's standpoint. At the beginning of Jan, Turner Construction Company pays $4,410 in worker's compensation insurance for the fir...
View Full Document

This note was uploaded on 02/13/2012 for the course ACCT 101 taught by Professor Na during the Fall '10 term at HKUST.

Ask a homework question - tutors are online