ACC1200 Lecture 3: Week 3
Document Summary
Income statements shows the financial performance of an entity for a given time period: shows revenue and costs, revenue cost of goods sold (cogs) = gross income, non-direct costs (not directly linked with sales, overheads) Here, income is greater than expenses, and so entity records a profit. Accrual notes transactions before cash has been transferred. Going concern: assuming the business will be functioning in to the foreseeable future. Income received in advance: cash is received but the goods or services have not yet been provided. Accrued expenses: expense incurred but cash not yet paid. Depreciation expenses: systematic allocation of the assets value over the estimated useful life of the asset. Prepaid expense: expenses paid in advance but not yet incurred. Accumulated depreciation: the total allocated depreciation to date on a particular asset. Accrual accounting: transactions are recorded when they occur irrespective of whether the cash has changed hands or not.
