MAA103 Lecture Notes - Lecture 6: Current Liability, Timesheet, Cheque

• School: Deakin University
• Department: Business and Law
• Course: MAA103
• Professor: All

Document Summary

Topic 6 - classification and analysis of business transactions. Communicates the economic events of an organisation to interested users. A transaction is an event that has a financial impact on the entity e. g. paid wages of ,000. The numbers in financial statements come mainly from the business entity"s transactions. Each business transaction is initially recorded in some form of source document. All business transactions are recorded on the basis of when the cash is actually received or paid. Profit based on the cash accounting" system is the difference between cash received as income; and cash paid for expenses. Records expenses when they have been incurred or used up. Even if the related cash has not yet changed hands. Provides the most accurate profit or loss for a period. Because it reflects all business transactions completed during the period. Profit based on the accrual accounting" system is the difference between revenue earned and expenses incurred for the accounting period.