ADMS 2500 Lecture Notes - Lecture 3: Bed Bug, Retained Earnings, Trial Balance

• School: York University
• Department: Administrative Studies
• Course: ADMS 2500
• Professor: Haiping Wang

Document Summary

Balancing does not show whether or not the correct accounts were debited and credited: a revenue is recognized when goods are delivered - - when the earning process is substantially complete and ultimate collectibility is reasonably assured. The equipment was used for 6 months in the first year: ,000 x 6mths/12 mths = ,000: b rent revenue for the period august 1 dec. 31st should be: ,200 x 5mths/12 mths = ,000 unadjusted balances showed rent revenue - ,200 rent revenue was overstated by ,200. It is the timing of the completion of the earning process, not the timing of cash collection, which determine the period in which revenue is recorded. C - although in many systems today the "documents" may be electronic information transmitted from a customer or supplier. B - worksheets are a way of organizing account information and adjusting entries in a manual system to facilitate financial statement preparation.