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Acc 111 Exam 2

This document discusses key accounting concepts and principles: 1. Accountants divide a business's economic life into artificial time periods, such as months or quarters, to analyze financial data. 2. Under the accrual basis of accounting, revenues are recognized when earned rather than when cash is received, and expenses are recognized when incurred rather than when cash is paid. 3. The matching principle requires that expenses be matched with the revenues generated in the period by the company's efforts.

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103 views2 pages

Acc 111 Exam 2

This document discusses key accounting concepts and principles: 1. Accountants divide a business's economic life into artificial time periods, such as months or quarters, to analyze financial data. 2. Under the accrual basis of accounting, revenues are recognized when earned rather than when cash is received, and expenses are recognized when incurred rather than when cash is paid. 3. The matching principle requires that expenses be matched with the revenues generated in the period by the company's efforts.

Uploaded by

uknwit24
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Time Peiiou Assumption: Accountants uiviue the economic life of a business into aitificial time peiious.

EXP: Nonthly,
Quaiteily.
Acciual: Basis Accounting, Revenues aie iecognizeu when eaineu iathei than when cash was ieceiveu. Expense aie
iecognizeu when incuiieu.
Cash Basis: Not in accoiuance with (uAAP)
Revenue Recognition: Recognizeu when seivice peifoimeu.
Natching Piinciples: Natching expenses with ievenues in the peiiou when the company makes effoits to geneiate ievenues.
Befeiials: Cash ieceiveu in auvance oi paiu in auvance. EXP: Piepaiu expenses, uneaineu ievenues.
Acciuals: Revenues maue but to be maue at latei uate EXP: Acciueu ievenue.
Tiial Balance: Each account is analyzeu anu to ueteimine if eveiything is up to uate.
Classifieu balance sheet: Accumulateu uepieciation, contia asset account.
-----------All assets go onto the balance sheet-------------
Tempoiaiy Accounts:
These accounts aie closeu: all ievenue accounts, all expense accounts, ownei uiawing account.
Peimanente Accounts:
These accounts aie not closeu: all asset accounts, all liabilities accounts, ownei capital account.
Balance sheet: Cuiient assets, piopeity plant & equipment, intangible, cuiient liabilities, long teim liabilities, capital.
Piepaiu expenses: Expenses paiu in cash anu iecognizeu as a asset.
0neaineu ievenue: ievenues ieceiveu in cash oi liabilities anu iecognizeu as a liability account.
Acciueu Expense: Expenses incuiieu but not yet paiu in cash oi iecognizeu.
Some moie EXP of uefeiials: 0neaineu ievenue, expenses.
Accumulateu uepieciation: Contia asset account.

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