BU127 Chapter Notes - Chapter 4: Retained Earnings, Trial Balance, Matching Principle
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BU127 Full Course Notes
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Document Summary
Prepare adjustments needed at the end of the period. Adjusting entries: are made at the end of every accounting period to report. Revenues and expenses in the proper period. Assets and liabilities in the proper amounts. Adjusting journal entries: record the effects of each period adjustments in a debits = credits format. Revenue: must be recorded when earned (the revenue recognition principle) Expenses: must be recorded in the same period as the revenues to which they relate (the expense recognition or matching principle) Assets: must be reported at amounts that represent the economic bene ts that remain at the end of the current period. Liabilities: must be reported at amounts owe at the end of the current period: deferral adjustments: An expense or revenue had been deferred if we have postponed reporting it on the income statement until a later period. Deferral adjustments decrease balance sheet accounts and increase corresponding income statement accounts.
