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Chapter 4 for course website

Chapter 4 for course website - Introduction To Financial...

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Introduction To Financial Accounting HKUST Chapter 4 Adjustments, Financial Statements, and the Quality of Earnings Slide 1 Chapter Four ACCT 101 Fall 2010 Allen Huang Introduction To Financial Accounting HKUST Review Operating cycle NI = Revenues Expenses + Gains Losses NI = Revenues – Expenses + Gains – Losses Structure of income statements Cash basis accounting vs. accrual basis accounting Revenue recognition principle Slide 2 Chapter Four Matching principle Journal entries for recognizing revenues and expenses
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Introduction To Financial Accounting HKUST Direction of Transaction Effects For Assets: DR = Left = Increase; CR Right Decrease Slide 3 Chapter Four CR = Right = Decrease For Liab and SE: CR = Right = Increase; DR = Left = Decrease Introduction To Financial Accounting HKUST Assets + DR CR Normal Liabilities DR + CR Normal Shareholders’ Double-Entry Bookkeeping Balance Balance Equity DR + CR Normal Balance Retained Earnings DR + CR Normal Contributed Capital DR + CR Slide 4 Chapter Four Balance Normal Balance Revenues DR + CR Normal Balance Expenses + DR CR Normal Balance
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