UT Knoxville ACCT 200 - Chapter 3 & 9 (28 pages)

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Chapter 3 & 9



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Chapter 3 & 9

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Pages:
28
School:
University of Tennessee
Course:
Acct 200 - Foundations of Accounting
Foundations of Accounting Documents

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1 Accrual Accounting Concepts Chapter 3 and Chapter 9 A200 Survey of Accounting University of Tennessee 2 Ch 3 Accrual Accounting Concepts Matching Revenue 1 Amounts earned by operating a business 2 Revenue is recognized recorded in the period it is earned whether or not cash is received at the same time 3 Revenue transactions increase equity through net income Expense 1 The cost of assets used or liabilities created in the process of generating revenue 2 Expenses are recognized recorded in the period they are incurred whether or not cash is paid at the same time 3 Expense transactions decrease equity through net income 3 Ch 3 Accrual Accounting Concepts Matching 1 2 Revenue is recorded in the same period as the Expenses that helped generate the revenue When revenue is earned increase a Revenue account and a increase the asset Cash when cash is received at the same time b increase the asset Accounts Receivable when cash will be received in the future Accrued Revenue c decrease the liability Unearned Revenue when cash was previously received Deferred Revenue Note See slide 9 4 Ch 3 Accrual Accounting Concepts Matching 1 Expenses are recorded in the same period as the Revenue they helped generate 2 When expense is incurred increase an Expense account and a decrease the asset Cash when cash is paid at the same time b increase the liability Accounts Payable when cash will be paid in the future Accrued Expense c decrease the asset Prepaid Expense when cash was previously paid Deferred Expense 5 Ch 3 Recording Transactions Transaction 1 Future Corporation began business on September 1 2012 by issuing capital stock to investors for 50 000 cash STATEMENT OF CASH FLOWS explains the change in the asset Cash INCOME STATEMENT and STATEMENT OF RETAINED EARNINGS BALANCE SHEET explains the change in the equity Retained Earnings 50 000 Cash in Financing Assets Cash 50 000 Liabilities Equity Capital Stock 50 000 6 Ch 3 Recording Transactions Transaction 2 During September Future



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