ACCT 2001 Chapter : Ch 04
Document Summary
Learning objectives: explain the accrual basis of accounting and reasons for adjusting entries, prepare adjusting entries for deferrals, prepare adjusting entries for accruals, prepare an adjusted trial balance and closing entries. Account cycle problems covers all steps: accounting assumptions and principles: Expense recognition principle the economic life of a business can be divided into artificial time periods. that companies recognize revenue in the accounting period in which the performance obligation is satisfied. The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues: differentiate between accrual-basis accounting and cash-basis accounting: Accrual-basis accounting: transactions recorded in the periods in which the events ____occur_____, revenues are recognized when ___________, even if cash was not received, expenses are recognized when _____________, even if cash was not paid. Includes one _______________ account and one ________________ account: needed to ensure that the ______________________ and. Expenses paid in cash before they are used or consumed: unearned revenues.
