ACT 205 Lecture Notes - Lecture 6: Deferral, Deferred Income, Financial Statement
Document Summary
Expenses are reported in the same period as the revenues they help to generate. When goods and services are provided to customers. In the period costs are used to help produce revenues. The process of recording (incorporating) an item into the financial statements as an asset, liability, revenue, expense, etc. *not all companies are required to use accrual accounting. One of the most important steps in applying accrual accounting. Made every time a company prepares financial statements. Makes sure that the revenue recognition and matching principles are followed. Record events that have occurred, but have not been recorded. Every adjusting entry will include one income statement account and one balance sheet account. Cost of assets acquired in one period that will be expensed in the a future period. Cash received and recorded as liabilities before revenue is earned. Revenue earned but have not received cash or recorded an amount receivable.
