ACC 311 Chapter Notes - Chapter 4: Income Statement, Asset, Accrual

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16 Feb 2017
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Chapter 4: adjustments, financial statements, and the quality of earnings. Accounting cycle: the process used by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle. Prepare trial balance to see if debits equal credits. Adjust revenues and expenses and related balance sheet accounts. Prepare a complete set of financial statements. Close revenues, gains, expenses, and losses to retained earnings. Adjusting entries: entries necessary at the end of the accounting period to measure all revenues and expense of that period. Previously recorded liabilities that were created when cash was received in advance. Must be reduced for the amount of revenue actually earned during the period. Cash will be received after services are performed or goods are delivered. Previously recorded assets created when cash was paid in advance and that must be reduced for amount of expense actually incurred during period through use of asset.

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