BU127 Lecture 5: Chapter 3
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BU127 Full Course Notes
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Document Summary
The time it takes for a company to pay cash to suppliers, sell those goods and services to customers, and collect cash from customers. To meet the needs of decision makes, we report nancial information for relatively shot time periods (monthly, quarterly, annually) Elements on the classi ed statement of earnings: results of continuing operations, results of discontinues operations = net earnings, earnings per share. Recognized when the transaction that causes them occurs, not necessarily when cash is paid or received. Situation #1- cash is received before revenue is earned. If cash is received before the company delivers goods or serveices, liability account. Situation #2- cash is received on the date revenue is earned. Situation #3- cash is received after revenue is earned. Situation #1- cash is paid before expense is incurred. Situation #2- cash is paid on the date expense is incurred. Situation #3- cash is paid after expense is incurred.
