COMM 111 Chapter Notes - Chapter 3: Trial Balance, General Ledger, Current Liability
Document Summary
Accounting information can be prepared using either the cash basis or the accrual basis of accounting. When using cash-basis accounting, we record only business transactions involving the receipt or payment of cash. When using the accrual accounting method, the receipt or payment of cash is irrelevant to deciding whether a business transaction should be recorded. The ifrs and aspe have revenue recognition principles that must be met before a business can recognize revenue from a transaction. The ifrs and aspe have expense recognition principles that must be met before a business can recognize expense. These include: there has been a decrease in future economic benefits caused by a decrease in an asset or an increase in a liability, the expense can be reliably measured. Insurance payments (premiums) made in advance are normally charged to the asset account prepaid insurance when they are paid. It is necessary to make an adjustment to debit (increase) insurance.