BU387 Chapter Notes - Chapter 3: Deferral, Financial Statement, Income Statement
Document Summary
Permanent accounts asset, liability, and equity accounts (b/s); let open. Temporary accounts revenue, expense, and dividend accounts; periodically closed. Adjusing entries entries that are made at the end of an accouning period to bring all accounts up to date on an accrual accouning basis so that correct inancial statements can be prepared. Four financial statements: balance sheet, income statement, statement of cash flows, statement of retained earnings / statements of changes in shareholders" equity. There is also a statement of comprehensive income which can be a part of the income statement. Prepayments: prepaid expenses expenses paid in cash and recorded as assets before they are used or consumed, unearned revenues revenues received in cash and recorded as liabiliies before they are earned. Accruals: accrued revenues revenues earned but not yet received in cash or recorded, accrued expenses expenses incurred but not yet paid in cash or recorded.
