Understanding of all economic transactions (accrual accounting: 2. To know how a company manages their cash (cash accounting: cash vs. Accrual basis: the time period that we record the transactions in. Means that information must be provided on a timely basis to be relevant. Means that information must be provided on time at the end of every period. Post journal entries to general ledger: 4. Record and post adjusting journal entries: 5. Chapter 5/6: revenue recognition principle, revenue is recognized when earned. Collection assured: applications of revenue recognition principle, manufactured goods and merchandise, long-term contracts, franchises, commodities, installment sales. When readily convertible to cash: rent and interest. Fob destination point: freight is paid by the shipper (supplier/seller) Fob shipping point: freight is paid by the buyer (purchaser, credit terms, in order to encourage early payment of accounts, some companies provide terms , these terms relate to how much needs to be paid and when, example.