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About this document
- Pages
- 132 pages
- Price
- $45 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting, Business
- Module
- Module 3
This document covers the adjusting process in accounting, with true or false questions on cash vs. accrual basis, revenue recognition, matching concept, and adjusting entries. It helps students practice and review key concepts in accounting. It covers Module 3.
What's inside
- Cash vs. accrual basis of accounting
- Revenue recognition concept
- Matching concept
- Adjusting entries
- Deferred and accrued revenue
Who it is for: Students taking an accounting course. (Undergraduate)
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Summary
Accrual accounting uses the accruals and adjustments. Students see examples and test their understanding.
Cash Basis vs. Accrual Basis
Revenue is recorded when earned. Expenses are recorded when incurred, not when cash changes hands. Accrual basis is required by GAAP.
Adjusting Entries and Concepts
Accounting concepts include the matching concept and the revenue recognition concept. Accruals and deferrals are necessary for adjusting entries.
Errors and Adjustments
Errors in accounting can cause overstated or understated revenues, expenses, or net income. Adjusting entries correct these errors.
Journal Entries for Transactions
Journal entries record transactions and adjustments. Examples show how to apply the matching concept and record prepaid expenses.
Key terms
- Accrual accounting
- A method where revenues are recorded when earned, and expenses when incurred.
- Adjusting entries
- Entries made at the end of an accounting period to update accounts.
- Deferred expenses
- Cash paid before expenses occur
- Deferred revenue
- Cash received before revenue is earned.
- Matching concept
- A principle that requires expenses to be recorded when the related revenue is recorded.
- Revenue recognition concept
- A principle that requires revenue to be recorded when earned.
Questions this document helps with
- What are the principles of accrual accounting?
- What errors can occur in accounting?
- Why do adjusting entries need to be made?
Summary written with AI from the document's text.
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