BU227 Lecture Notes - Lecture 4: Financial Statement, Cash Cash, Accounting Information System
Document Summary
Estimating revenues & expenses at year-end ** may not need to know this; it was under nestle: financial statements are not distributed to users the day of completion. They"re released after management & external auditors make critical evaluations: managers ensure that correct amounts are reported on statement of fp and income, auditors must assess the controls by management to safeguard the assets & ensure. Purpose of adjustments: accounting systems record most recurring daily transactions, particularly those involving cash. But cash receipts/payments aren"t always in the period of the activities that create revenues/expenses. 2012: solution to difference in timing is to record adjusting entries at the end of every accounting. In practice, almost every account could require an adjustment. It"s recorded when received or paid. (ex: deferred ticket revenue; rent receivable: revenues, aje: lower liabilities, raise revenues & se, deferred revenues: previously recorded liabilities that must be period-end to reflect amount of revenue earned (ex: customer prepays).
