ACC 310F Study Guide - Quiz Guide: Accrual, Financial Statement, Trial Balance
Document Summary
Explain the reasons for adjusting entries and identify the major types of adjusting entries. Describe the nature and purpose of an adjusted trail balance. Many business transactions affect more than one of the arbitrary time periods. Most large companies must prepare both financial statements. A fiscal year usually begins with the first day of a month and ends 12 months later on the last day of a month (doesn"t matter where it starts) Accrual: companies record transactions that change a company"s financial statements in the periods in which the events occur. Cash: companies record revenue when they receive cash and when they pay out cash. Fails to record revenue for a company that has performed services but has not received cash. Requires that companies recognize revenue in the accounting period in which the performance obligation is satisfied. Are recorded at the end of the period. Ensure that the revenue recognition and expense recognition principles are followed.
