Timing Issues&accural

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University of Toronto Scarborough
Financial Accounting
Liang Chen

Timing Issues Selecting an accounting Time Period 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 Fiscal and Calendar Years 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 Recognizing Revenues and Expenses 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 Accrual Vs Cash Basis of Accounting Accrual basis of accounting If you follow the revenue recognition
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