AFM101 Lecture Notes - Lecture 5: Deferral, General Ledger, Debits And Credits

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AFM101 Full Course Notes
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AFM101 Full Course Notes
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= the process used by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle. During the period: analyze transactions, record journal entries in the general ledger, post amounts to the general ledger; Adjusting entries = entries necessary at the end of the accounting period to identify and record all revenues (revenue principle) and expenses (matching process) of that period. Companies wait until the end of the accounting period to adjust their accounts because adjusting it daily would be very costly and time-consuming. Adjusting journal entries involves one account on the statement of financial position and one account on the statement of earnings. There are 4 types of adjustments (2 in which cash was already received or paid and 2 which cash. Each of these adjustments involve two entries: one entry to record the cash receipt or payment during the period.

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