Upgrade to remove ads
Chapter 3: The Income Statement
Terms in this set (18)
include buying goods and services from suppliers and employees, and selling goods and services to customers and then collecting cash from them
Cash basic accounting
records revenues when cash is received and expenses when cash is paid
Why isn't cash basis accounting allowed by GAAP or IFRS?
Because it has the results often looked skewed
Accrual basis accounting
Records revenues when they are earned and expenses in the same period as the revenues to which they relate, regardless of the timing of cash receipts or payments
Revenue recognition principle
records revenues when they are earned not when its received
Five Step Model for Reporting Revenue
1. Identify the contract
2. Identify the seller's performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
5. Recognize revenue when (or as) each performance obligation is satisfied
If cash is paid BEFORE sale/service, is revenue reported?
If cash is paid WITH sale/service, is revenue reported?
If cash is paid AFTER sale/service, is revenue reported?
Expense recognition principle
record expenses in the same period that they're incurred
when a business collects cash from customers in advance of completing a service or delivering a product
If cash is paid BEFORE expense, is the expense recorded?
If cash is paid WITH expense, is the expense recorded?
If cash is paid AFTER expense, is the expense recorded?
Expenses, assets, dividends
Revenue, investment, liabilities
Profit margin equation
Unadjusted trial balance order
3. Common stock
4. Retained earnings
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 2: The Balance Sheet
Ch. 4: Adjustments, Financial Statements, and Fina…
Journal Entry terms -- debit or credit?
YOU MIGHT ALSO LIKE...
Accounting chapter 4
Accounting test #2
ACC 201, Ch. 4 (Quiz)
Accounting Ch. 3
OTHER SETS BY THIS CREATOR
Week 8 (Module 10)
Marketing Module 14