ACCT 217 Lecture Notes - Lecture 4: Accrual, Financial Statement, Trial Balance

• School: University of Calgary
• Department: Accounting
• Course: ACCT 217
• Professor: Darrin Ambrose

Document Summary

Companies need immediate feedback on how well they are doing. Accounting divides the economic life of a business into artificial time periods. One-year period is known as the fiscal year. Many transactions affect more than one time period. Due to ordinary activity, a decrease in future economic benefits occurs. A decrease in an asset or an increase in a liability. Often (but not always) coincides with revenue recognition. Transactions affecting a company"s financial statements are recorded in the period the events occur, rather than when cash is received or paid. Revenue is recorded when earned, rather than when cash is received. Expenses are recorded when goods or services are consumed or used, rather than when cash is paid. Revenue is recorded only when cash is received. Expenses are recorded only when cash is paid. Revenue and expenses can be manipulated by timing the receipt and payment of cash.