PowerPoint - Ch.3

Cash a accounts receivable a 3 29 xxx xxx revenue

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Unformatted text preview: TS RECEIVABLE is reduced. Cash received after revenue is earned ­ Company Delivers Cash Received Accounts receivable (+A) xxx Revenue (+R) xxx Cash will be collected. Cash (+A) Accounts receivable (-A) 3-29 xxx xxx Revenue Principle Assets reflecting revenues earned but not yet received in cash include . . . CASH TO BE COLLECTED (Owed by customers) and already e arned as REVENUE (Earned when goods or services provided) Interest receivable Interest revenue Rent receivable Rent revenue Royalties receivable Royalty revenue 3-30 The Matching Principle – “Match” Expenses up with Revenues in the same period. Resources consumed to earn revenues in an accounting period should be recorded in that period, regardless of when cash is paid. Example: Salary & BONUS Expense 3-31 The Matching Principle If cash is paid before the company receives goods or services, an asset account, PREPAID EXPENSE (“PREPAID” is the KEY word) is recorded. Cash is paid before expense is incurred ­ $ Paid Prepaid expense (+A) xxx Cash (­A) xxx 3-32 The Matching Principle “incurred” mean...
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This note was uploaded on 10/03/2013 for the course ACC 230 taught by Professor Auerbach,m during the Fall '08 term at CSU Dominguez Hills.

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