COMMERCE 1BA3 Chapter Notes - Chapter 3: Accrual, Pearson Education, Financial Statement
14 Jul 2014
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After working with the material presented in chapter 3, you should be able to: Objective 1: explain how accrual accounting differs from cash-basis accounting. Instructor"s resource manual for harrison et al. , financial accounting, 5ce: in accrual-basis accounting, an accountant recognizes the impact of a business transaction as it occurs. As a result, transactions are recorded as incurred, not when cash is received or disbursed. Stone company received ,000 from customers during 2012. Of that amount, ,000 was for services rendered in 2011 but collected in 2012. Another ,000 was received from a customer for services to be provided early in 2013. Stone had provided ,000 of services in 2012 that had not yet been collected. Cash basis: ,000; accrual basis: ,000 (,000 - ,000 - ,000 + 45,000). Objective 2: apply the revenue and expense recognition principles. Stone company had ,000 of supplies at the beginning of 2012.
