BU387 Lecture Notes - Lecture 1: Financial Statement, Income Statement, Accrual
Document Summary
Permanent accounts: asset, liability, and equity accounts (b/s); left open. Temporary accounts: revenue, expense, and dividend accounts; periodically closed. Adjusting entries: entries that are made at the end of an accounting period to bring all accounts up to date on an accrual accounting basis so that correct financial statements can be prepared. Four financial statements: balance sheet, income statement, statement of cash flows, statement of retained earnings / statements of changes in sha(cid:396)eholde(cid:396)s e(cid:395)uity. There is also a statement of comprehensive income which can be a part of the income statement. Prepayments: prepaid expenses: expenses paid in cash and recorded as assets before they are used or consumed, unearned revenues: revenues received in cash and recorded as liabilities before they are earned. Accruals: accrued revenues: revenues earned but not yet received in cash or recorded, accrued expense: expenses incurred but not yet paid in cash or recorded.
