BU127 Lecture 4: BU 127 Chapter 4.docx
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BU127 Full Course Notes
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Document Summary
Adjustments, financial statements, and the quality of earnings. Close revenues, gains, expenses, and losses to. During the accounting period, external transactions between the business and other external parties are recorded as they occur. At the end of the accounting period, the account balances are analyzed and adjusting journal entries are recorded for internal transactions that have a direct and measurable effect on the accounting entity, particularly for revenue and expense recognition. Because transactions occur over time, adjustments are required at the end of each fiscal period to get the revenues and expenses into the right period. Deferrals: receipts of assets or payments of cash in advance of revenue or expense recognition. Accruals: revenues earned or expenses incurred that have not been previously recorded. A listing of individual accounts, usually in financial statement order (a, l, se, r, e). Ending debit or credit balances are listed in two separate columns. Total debit account balances should equal total credit account balances.
