BU127 Chapter 4: Chap 4
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BU127 Full Course Notes
Verified Note
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Document Summary
Bu127 chapter 4 adjustments, financial statements, and the quality of earnings. Lo # 1: explain the purpose of adjustments and analyze the adjustments necessary at the end of the period to update statement of financial position and income statement accounts. Preparing financial statements that have: high quality = relevance + reliability. Accounting cycle: the process used by entities to analyze and record transactions, adjust the record at the end of the period, prepare financial statements, and prepare the records for the next cycle. The purpose of adjust entries is because cash is not always recorded when it received/paid. Adjusting entries are entries necessary at the end of the accounting period to identify and record all revenues and expenses of that period. Each of these types of adjustments involve two entries: one before the cash receipt of payment, one for recording the revenue or expense in the proper period (through adjusting entry)
