Accounting Chapter 3 Notes

matching principle 1 measures all the expenses

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Unformatted text preview: the business has delivered a good or service to the customer. (Ex: Revenue is earned when you go to work everyday- not the date you get paid) - Amount of revenue to record: Record revenue for the actual value of the item or service transferred to the customers Matching Principles - Matching principle guides accounting for expenses. Expenses- such as salaries, rent, and advertising- are assets used up and liabilities incurred in order to earn. - Matching Principle 1) Measures all the expenses incurred during the period and 2) Match the expenses against the revenues of the period (Compute net income/net loss) The Time- Period Concept - Time period concept: requires that information is reported at least annually - Key Takeaway: Principles guide us as to when (time period and accounting period concepts) and how (the revenue recognition and matching principles) to record revenues and expenses Pic: " Unadjusted Trail [COMPANY’S NAME] Unadjusted Trail Balance [date in time] Accounts Debit Cash $4,800 Credit Accounts Receivable Supplies Prepaid Rent Furniture Building Accounts Payable Unearned Service Revenue Notes Payable Common Stock Retained Earnings Dividends Service Revenue Salary Revenue Utilities expense Total Balance 2,200 700 3000 18000 48000 1000 900 400 79000 Catherine Liou Accounting 121 Feb 17, 2013 18200 600 20000 30000 3200 7000 79000 Why We Adjust the Accounts - Unadjusted trial balance lists the revenues and expenses of the agency. However,...
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This note was uploaded on 04/08/2014 for the course ECON 121 taught by Professor Ronald during the Spring '11 term at UMBC.

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