ACCTNG 2400 1st Edition Lecture 10 Outline of Last Lecture I. Chapter 3: Reporting Operating Results on the Income Statementa. Revenues and expensesb. Cash basis vs. Accrual BasisOutline of Current Lecture I. Debits and Credits as Revenues and ExpensesII. Matching principleIII. Revenue and Expense recognitionCurrent LectureI. Debits and Credits as Revenues and Expensesa. Memory aid – DEAD CRLSDebits increase: Credits increase:Expenses RevenuesAssets LiabilitiesDividends Stockholders Equity- Revenues are recorded with credits- Expenses are recorded with debitsRevenue principle – revenues are recognized (recorded on financial statement) when they are earned (the have done what is necessary to obtain the right to receive payment)Revenue and Expense RecognitionThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Matching Principle – record expenses in the same time period as the revenues with which they can be reasonably associated.- Reasonably associated – some costs can be directly associated with revenue such as raw materials that go into labor or sales commissions. But most costs CAN’T be reasonably associated withspecific revenues such as advertising or office rent
View Full Document
Unlocking...