BSB110 Lecture Notes - Lecture 5: Deferral, Accrual, Financial Statement
Document Summary
Revenue recognised when goods and services are provided. Expenses recognised when assets are consumes or liabilities incurred. Revenue recognised when the cash is received. Expenses recognised when the cash is paid. Accounting divides the economic life of a business into artificial time periods. It is probable that any future economic benefits associated with the revenue will flow to the entity. The revenue can be measured with reliability. Expense are decreases in economic benefits (decreases in equity that are not due to distributions to the owner) Expenses should be recognised when and only when. The outflow of future economic benefits associated with the expense is probable. Adjusting entries are necessary each time financial statements are prepared to make sure: Revenues and expenses are recorded in the correct accounting period. Recognition criteria are followed for assets, liabilities, revenues and expenses. Accruals: accrued revenues (assets, amounts not yet received or recorded, for which goods or services have been provided i. ii.
