ACC 211 Lecture Notes - Lecture 1: Income Statement, Accounts Receivable, Form 10-Q
16 Jan 2015
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Income statement net income used in statement of retained. Adjust records at the end of the period. Prepare records for the next cycle: unadjusted trial balance. List of account with their corresponding credit or debit balances: purpose of adjustments. Transactions are made when cash is received or paid. Cash is not always received in the period when revenue is earned: cash is not always paid in the period in which the company incurs and expense. Two entries must be made in this situation. One to record revenue when it is earned: or an expense when it is incurred. Another to record a cash receipt: or a cash payment. Types of adjustments: deferred (unearned) revenues, accrued revenues, deferred expenses, accrued expenses. *closing entries must be made to reduce all income statement accounts to zero. Purpose of closing entries: transfer balances in temporary accounts to retained earnings, establish zero balance in these accounts to start accumulation in next period.
