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Canada (161,877)
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COMM 293 (15)
Chapter 4

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Department
Commerce
Course
COMM 293
Professor
Patricia Mallia
Semester
Fall

Description
← Accounting Cycle: • the process used by entities to analyze the record transactions, adjust the records at the end of  the period, prepare financial statements, and prepare the records for the next cycle. ← ← Trial Balance: • list of all accounts with their balances to provide a check on the equality of the debits and  credits • Contra Account: o an account that is an offset to, or reduction of, the primary account o eg. Accumulated Amortizaiton and fixed assets • net book value: o the difference b/w its acquisition cost and accumulated amortization (its related contra  account) ← ← Adjusting Entries: • entries necessary at the end of the accounting period to identify and record all revenues and  expenses of the period • revenues: o deferred revenue:  previously recorded liabilities that need to be adjusted at the end of the  accounting period to reflect the amount of revenues earned  if cash is earned for a revenue and the “unearned revenue” account is  credited, but then the revenue is earned over the accounting period, the  “unearned revenue” account must be debited and the “revenue” account  credited to account for the service being provided o accrued revenue:  previously unrecorded revenues that need to be recorded at the end of the  accounting period to reflect the amount earned and its related receivable  account  eg. revenue earned over time, and then at the end of the accounting period  (cash still not received) accounts receivable needs to be increased and  revenue increased. • expenses: o deferred expense:  previously acquired assets that need to be adjusted at the end of the  accounting period to reflect the amount of expense incurred in using the  assets to generate revenue  adjusting entry decreases asset and increases expense o accrued expense:  previously unrecorded expenses that need to be recorded at the end of the  accounting period to reflect the amount incurred and its related payable  account  adjusting entry increases expense and increases liability (accounts payable) ← ← Adjustment Process: • Step 1: o identify whether the adjustment is to an existing deferred revenue or expense or an  unrecorded accrued revenue or expense  “was cash already received or paid prior to the end of the period – or – will  cash be received or paid in the future?”  if a deferred account is to be adjusted, write the journal entry that was made  when the cash was rec
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