Acct

• The time it takes for a company to pay cash to suppliers, sell goods and services to customers, and collect cash from customers.
• Begin:
• Purchase/ manufacture goods and service
• Pay suppliers
• Deliver or provide service
• Receive payments
• To beginning again

Indicates that the long life of a company can be reported in shorter time periods.

• Increases in assets or settlements of liabilities from ongoing operations of the business.
• Operating Revenue: From the sale of goods or services.
• -Often cash or accounts receivables is increased.
• unearned or deferred revenue: when a customer pays for good or services in advance, goes to liability account. Revenue isn't recorded yet, just cash and liability.
• Ex. Restaurant Sales Revenue, Franchise Fee Revenue

• Expenses: decreases in assets or increases in liabilities from ongoing operations incurred to generate revenues during the period.
• -When an asset such as equipment or supplies is used to generate revenues during a period, all or a portion of the asset's cost is recorded as an expense.
• -When an amount is incurred to generate revenues during a period, such as using electricity, whether already paid or to be paid in the future, an expense results.
• Ex.Cost of Sales, Salaries Expense, Rent Advertising, general and administrative, depreciation expense

an increase in assets or decrease in liabilities from a peripheral transaction.

Decreases in assets or increases in liabilities from a peripheral transaction.

• Normal but not central transactions.
• Ex. Investment income, interest expense

• Revenues are recorded with cash is received, and expenses are recorded when cash is paid, regardless of when the revenues were earned or the expenses incurred.
• We do not use this!

Revenues are recognized when they are earned and expenses when they are incurred. Doesn't matter when cash is recieved.

• Is recognized when:
• 1) Delivery has occurred or services have been rendered
• 2) There is persuasive evidence of an arrangement for customer payment
• 3) The price is fixed or determinable.
• 4) Collection is reasonably assured

• Debit Cash (A+)
• Credit Unearned Revenue Account (L+)

• Then when it is paid off, you will
• Debit Liabilities (L-)
• Credit Revenue (R+)

• Debit Accounts Receivable (A+)
• Credit Revenue (R+)
• When cash is received:
• Debit Cash (A+)
• Credit Accounts Receivable (A-)

• Costs incurred to generate revenues be recognized in the same period.
• As with revenues, expenses are recorded as incurred, regardless of when cash is paid.

• Debit Prepaid expense (A+)
• Credit Cash (A-)
• When paid, Debit Expense (E+)
• Credit Prepaid expense (A-)

• Debit Expense (E+)
• Credit Payable (L+)
• When cash is paid, Debit Payable (L-)
• Credit Cash (A-)