Accrual accounting assets liabilities revenues and

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: asured? Accrual Accounting Assets, liabilities, revenues, and expenses should be recognized when the transaction that causes them occurs, not necessarily when cash is paid or received. Required by - Generally Acceptable Accounting Principles 9 GAAP Revenue Principle Recognize revenues when . . . lDelivery has occurred or services have been rendered. lThere is persuasive evidence of an arrangement for customer payment. lThe price is fixed or determinable. lCollection is reasonably assured. 10 Revenue Principle If cash is received before the company delivers goods or services, the liability account UNEARNED REVENUE is recorded. Cash received before revenue is earned ­ Cash Received Cash (+A) xxx Unearned revenue (+L) xxx 11 Revenue Principle When the company delivers the goods or services UNEARNED REVENUE is reduced and REVENUE is recorded. Cash received before revenue is earned ­ Cash Received Company Delivers Cash (+A) xxx Unearned revenue (+L) xxx Revenue will be recorded when earned. 12 Unearned revenue (­L) xxx Service revenue (+R) xxx Revenue Principle Typical liabilities that become revenue when earned include . . . CASH COLLECTED (Goods or services due to customers) REVENUE over time will (Earned when goods become or services provided) Rent collected in advance Rent revenue Unearned air traffic revenue Air traffic revenue Deferred subscription revenue Subscription revenue 13 Revenue Principle When cash is received on the date the revenue is earned, the following entry is made: Company Delivers AND Cash Received Cash (+A) xxx Revenue (+R) xxx 14 Revenue Principle If cash is received aft...
View Full Document

This note was uploaded on 01/30/2014 for the course ACCTNG 211 taught by Professor Colbylammers during the Spring '12 term at University of Missouri-Kansas City .

Ask a homework question - tutors are online