ACCT 2100 Lecture Notes - Lecture 2: Accrual, Deferral, Accounts Receivable
Document Summary
Balance sheet: discloses an entity"s assets, liabilities, and stockholders" equity at a particular point in time. Comparing cash flow from operations with net income: amount of net income measured using accrual accounting differs from the amount of cash flow from operating activities. Second accounting cycle: cash payment to creditors are asset use transactions. Accounting for supplies: the purchase of supplies is an asset source transaction, the asset account supplies and the liability account accounts payable increase. Year-end adjustment for supplies: accountants transfer to expense the total cost of all supplies used during the entire accounting period in a single year-end adjusting entry. Accounting for prepaid items: accrual accounting draws a distinction between the terms cost and expense, cost might either be an asset or expense. If a company has already consumer a purchased resource in the process of earning revenue, the cost of the resource is an expense.
