tailieunhanh - Lecture Accounting: Tools for business decision making (5th edition): Chapter 4 - Kimmel, Weygandt, Kieso

Chapter 4 - Accrual accounting concepts. After studying this chapter, you should be able to: Explain the accrual basis of accounting and the reasons for adjustments, prepare adjustments for deferrals, prepare adjustments for accruals, prepare financial statements from adjusted amounts. | ACCRUAL ACCOUNTING CONCEPTS Accounting, Fifth Edition 4 After studying this chapter, you should be able to: Explain the revenue recognition principle and the expense recognition principle. Differentiate between the cash basis and the accrual basis of accounting. Explain why adjusting entries are needed, and identify the major types of adjusting entries. Prepare adjusting entries for deferrals. Prepare adjusting entries for accruals. Describe the nature and purpose of the adjusted trial balance. Explain the purpose of closing entries. Describe the required steps in the accounting cycle. Understand the causes of differences between net income and cash provided by operating activities. Learning Objectives Preview of Chapter 4 Accounting Fifth Edition Kimmel Weygandt Kieso Generally a month, a quarter, or a year. Fiscal year vs. calendar year Accountants divide the economic life of a business into artificial time periods (Periodicity Assumption). LO 1 Explain the revenue recognition principle and the expense recognition principle. Jan. Feb. Mar. Apr. Dec. . . . . . Timing Issues What is the periodicity assumption? a. Companies should recognize revenue in the accounting period in which it is earned. b. Companies should match expenses with revenues. c. The economic life of a business can be divided into artificial time periods. d. The fiscal year should correspond with the calendar year. Review Question Timing Issues LO 1 Explain the revenue recognition principle and the expense recognition principle. Timing Issues The Revenue Recognition Principle Companies recognize revenue in the accounting period in which the performance obligation is satisfied. LO 1 Explain the revenue recognition principle and the expense recognition principle. TEACHING TIP Service businesses recognize revenue when the services are performed, although many customers may have been billed for the services (on account). The cash has not been received; however, the services have been performed. . | ACCRUAL ACCOUNTING CONCEPTS Accounting, Fifth Edition 4 After studying this chapter, you should be able to: Explain the revenue recognition principle and the expense recognition principle. Differentiate between the cash basis and the accrual basis of accounting. Explain why adjusting entries are needed, and identify the major types of adjusting entries. Prepare adjusting entries for deferrals. Prepare adjusting entries for accruals. Describe the nature and purpose of the adjusted trial balance. Explain the purpose of closing entries. Describe the required steps in the accounting cycle. Understand the causes of differences between net income and cash provided by operating activities. Learning Objectives Preview of Chapter 4 Accounting Fifth Edition Kimmel Weygandt Kieso Generally a month, a quarter, or a year. Fiscal year vs. calendar year Accountants divide the economic life of a business into artificial time periods (Periodicity Assumption). LO 1 Explain the revenue recognition .