MGT 11A Chapter 3: CHAPTER 3- part 1
Document Summary
To provide timely info, accounting systems prepare reports at regular intervals. Most orgs use a year as their primary accounting period. Annual financial statements: reports covering a one-year period. Interim financial statements: covers 1, 3, or 6 months of activity. Usually companies with little seasonal variation in sales. Natural business year: reporting period ends when sales are at their lowest level for the year. Companies that do have seasonal variation in sales use. After external transactions and events are recorded, several accounts require adjustments before their balances appear in financial statements. Required bc internal transactions and events are not yet recorded. 1) accrual basis accounting: records revenues when services and products are delivered and records expenses when incurred. 2) cash basis accounting: records revenues when cash is received and records expenses when cash is paid. Cash basis income: cash receipts - cash payments.
