tailieunhanh - Lecture Fundamentals of financial accounting (3e): Chapter 4 - Phillips, Libby, Libby
Chapter 4 - Adjustments, financial statements, and financial results. In the previous chapter, you learned how to analyze, record, and summarize the effects of operating transactions on balance sheet and income statement accounts. This chapter concludes the accounting cycle by focusing on adjustments, financial statement preparation, and the closing process. | Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Fundamentals of Financial Accounting 3e by Phillips, Libby, and Libby. Chapter 4 Adjustments, Financial Statements, and Financial Results PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Fred Phillips, ., CA Chapter 4: Adjustments, Financial Statements, and Financial Results Solution: Adjustments are made to the accounting records at the end of the period to state assets, liabilities, revenues, and expenses at appropriate amounts. Why Adjustments Are Needed However, cash is not always received in the period in which the company earns the related revenue; likewise, cash is not always paid in the period in which the company incurs the related expense. Accounting systems are designed to record most recurring daily transactions, particularly any involving cash. 4- Part I Accounting systems are designed to record most recurring daily transactions, particularly any involving cash. As cash is received or paid, it is recorded in the accounting system. This focus on cash works well, especially when cash receipts and payments occur in the same period as the activities that lead to revenues and expenses. However, as you learned in Chapter 3, cash is not always received in the period in which the company earns the related revenue; likewise, cash is not always paid in the period in which the company incurs the related expense. Part II Adjustments are made to the accounting records at the end of the period to ensure assets and liabilities are reported at appropriate amounts. These adjustments also ensure the related revenues and expenses are reported in the proper period, as required by the revenue and matching principles. 1. Deferral Adjustments An expense or revenue has been deferred if we have postponed reporting it on the income statement until a later period. Sept. 1 Sept. 30 Use-up rent benefits Cash paid . | Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Fundamentals of Financial Accounting 3e by Phillips, Libby, and Libby. Chapter 4 Adjustments, Financial Statements, and Financial Results PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Fred Phillips, ., CA Chapter 4: Adjustments, Financial Statements, and Financial Results Solution: Adjustments are made to the accounting records at the end of the period to state assets, liabilities, revenues, and expenses at appropriate amounts. Why Adjustments Are Needed However, cash is not always received in the period in which the company earns the related revenue; likewise, cash is not always paid in the period in which the company incurs the related expense. Accounting systems are designed to record most recurring daily transactions, particularly any involving cash. 4- Part I Accounting systems are designed to record most .
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