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ACC 100 Chapter 4: ACC 100 Chapter 4 Notes.docx

44 views2 pages
goldswan943
13 Mar 2012
School
Ryerson University
Department
Accounting
Course
ACC 100
Professor
Walter Krystia

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Document Summary

Recognition: the process of including an item in the financial statements of an entity. Measurement: the attribute to be measured. Historical cost: the amount paid for an asset and used as a basis for recognizing it on the balance sheet and carrying it on later balance sheets. Realizable value: the amount of cash, or its equivalent, that could be received by selling an asset currently: unit of measure. The yardstick we currently use is units of money. Money is something accepted as a medium of exchange or as a means of payment. Cash basis: a system of accounting in which revenues are recognized when cash is received and expenses when cash is paid. Accrual basis: a system of accounting in which revenues are recognized when earned and expenses when incurred. Adjusting entries: journal entries made at the end of a period by a company using the accrual basis of accounting.

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Related Questions

Which of the following statements about accrual-basis accounting is true?

a. Accrual-basis accounting recognizes revenues when they are received in cash.

b. Accrual-basis accounting is optional under generally accepted accounting principles.

c. Accrual-basis accounting recognizes expenses when they are incurred.

d. Accrual-basis accounting follows the fiscal year assumption.

9. Under the accrual basis of accounting, revenues are recognized when they are earned and expenses are matched with revenues.

Completely and Precisely Define the Following Terms

The accrual basis of accounting:

The Matching principle:

Name and define one type of adjusting entry where cash is paid(or received) BEFORE Expenses or Revenues are Recognized:

Name and Define one type of adjusting entry where cash is paid(or received) AFTER Expenses or Revenue are Recognized:

Adjusted Trial balance: