BSB110 Lecture Notes - Cash Flow, Cash Flow Statement, Deferral
Document Summary
Lecture 2 recognizing services = revenue income statements tell us how well a business is doing for a specific period. Expenses reduce net profit and owners equity. Balance sheets tell us how well a business is doing at a specific date (as at ) To do an income statement you will need revenue and expenses. Decreases to amounts are recorded on the opposite side as the nature of the account. An entry has to effect at least two sides of the ledger. Net profit is made up of revenue and expenses. 5 types of adjustments: prepaid expense eg prepaid insurance. Dr depreciation expense - name of asset. Cr accumulated depreciation - name of asset: accrued expenses eg wages. Cr payable (liability: accrued revenues eg interest on term deposit. Cr revenue: unearned revenues eg fees received in advance for services. Owners equity is affected by profit, capital contributions and drawings. Revenue - expenses is the income statement.
