ACTG 1P91 Chapter Notes - Chapter 3: Cash Out, Income Statement, Accrual

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ACTG 1P91 Full Course Notes
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ACTG 1P91 Full Course Notes
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1. 1 income statement reports a company"s operation over a particular period of time. 1. 2 revenues are earned when a company delivers goods or provides services. At this point, the company may or may not receive cash. 1. 3 - when a company incurs a cost, that cost is recorded as an expense if there is no future benefit (e. g. utility bills) and this accounting treatment is called expensing a cost. If there is future benefit, the cost is recorded as an asset (e. g. purchase of equipment) and this accounting treatment is called capitalizing a cost . 1. 4 income statement also reports gains and losses, which arise from non-core operating activities: format of income statement, accrual basis. Business activities are measured and reported when the activities actually occur, not when the cash related to the item is received or paid. 365: two important principles under accrual basis. 4. 2 matching principle: record expenses in the period when the related revenues are earned.

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