MGAB01H3 Chapter : Timing Issues&accural

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27 Oct 2010
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MGAB01H3 Full Course Notes
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Accountants make the assumption that the economic life of a business can be divided into artificial time periods. This assumption is referred to as the time period assumption. Accounting time periods are generally one month, one quarter, or one year. Time periods of less than one year are called interim periods. An accounting time period that is one year in length is referred to as a fiscal year. The accounting period used by many businesses coincides with the calendar year. Revenue recognition principle: revenue must be recognized in the accounting period in which it is earned. The matching principle: expenses should be recognized in the same accounting period as the revenue they help to earn. If you follow the revenue recognition and matching principles, you are using the accrual basis of accounting. Transactions that . ,30,. 425,3813,3. ,89,9020398,7070. 47/0/3905074/8 in which the events occur. Revenue is recorded when cash is received and expenses are recorded when cash is paid.

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