This document provides an overview of accrual accounting and periodic adjustments. It discusses how accrual accounting differs from cash-based accounting in that it records economic events when they occur rather than when cash is exchanged. Periodic adjustments are needed to record revenues earned or expenses incurred that have not yet resulted in cash inflows or outflows. Examples provided include accruing wages earned but not yet paid, interest earned on a loan but not yet received, and prepaid rent that is initially recorded as an asset and expensed over time. The key idea is that accrual accounting and periodic adjustments allow financial statements to match revenues with the expenses incurred to generate those revenues within each reporting period.
This document provides an overview of accrual accounting and periodic adjustments. It discusses how accrual accounting differs from cash-based accounting in that it records economic events when they occur rather than when cash is exchanged. Periodic adjustments are needed to record revenues earned or expenses incurred that have not yet resulted in cash inflows or outflows. Examples provided include accruing wages earned but not yet paid, interest earned on a loan but not yet received, and prepaid rent that is initially recorded as an asset and expensed over time. The key idea is that accrual accounting and periodic adjustments allow financial statements to match revenues with the expenses incurred to generate those revenues within each reporting period.
Direitos autorais:
Attribution Non-Commercial (BY-NC)
Formatos disponíveis
Baixe no formato PDF, TXT ou leia online no Scribd
This document provides an overview of accrual accounting and periodic adjustments. It discusses how accrual accounting differs from cash-based accounting in that it records economic events when they occur rather than when cash is exchanged. Periodic adjustments are needed to record revenues earned or expenses incurred that have not yet resulted in cash inflows or outflows. Examples provided include accruing wages earned but not yet paid, interest earned on a loan but not yet received, and prepaid rent that is initially recorded as an asset and expensed over time. The key idea is that accrual accounting and periodic adjustments allow financial statements to match revenues with the expenses incurred to generate those revenues within each reporting period.
Direitos autorais:
Attribution Non-Commercial (BY-NC)
Formatos disponíveis
Baixe no formato PDF, TXT ou leia online no Scribd