ACBE100 Lecture Notes - Lecture 6: Deferral, Accrual, Historical Cost

• School: Macquarie University
• Department: Academic Communication in Business and Economics
• Course: ACBE100
• Professor: Dr Dana Skopal

Document Summary

Financial accounting for business: adjusting entrees and adjusted balance. Only arise when accrual based accounting is adopted. Under accrual based, in some cases the period which cash is paid or received does not coincide with the period in which expense and income are recognised. Therefore, some accounts must be adjusted on the last day of the accounting period to correctly recognise expenses and income not reflected in cast receipts or payments. Revenue that are collected or received but not yet earned. Expenses that have been incurred in the period, but payment has not yet been made, thus are unrecorded expenses. Revenue that have been earned in the period, but payment has not yet need received. Revenue must be recognise along with a receivable account (for future cash receipt of cash) Cash paid before benefits are consumed/expired (future benefit) Initially recorded as an asset at time of payment. This consumed/expired portion needs to be recorded as an expense.