3A vocab

Accrual
- what most companies use;recognize revenue when it is earned and expenses in the period incurred,without regard to the time of receipt or payment of cash (when the event
- occurs, not when paid/have to pay)
Strict Cash basis
- companies record revenue only when they receive cash, and the
- record expenses only when they disperse cash (when they receive or month have
- to pay); all about collecting revenue and paying expenses; ignores revenue and
- expense recognition
main difference between the two

TIMING
compute sales

cash collected from customers +/- accts receivable
COGS

operating expenses -/+ inventory +/- accounts payable
depreciation expense

accum dep. ending - accum dep. beginning
operating expenses

cash paid for operating expenses +/- prepaid expense +/- accrued operations expenses payable
cash collected from operating expenses

operating expenses - depreciation +/- payments +/- accrued expenses payable
Cash collected from customers

Net sales +/- accounts receivable
interest income (accrual basis)

cash received from interest +/- interest receivable
wages expense (accrual basis)

wages paid +/- wages payable
interest expense (accrual basis)

interest paid +/- interest payable

Author

abifulco

43516

Card Set

3A vocab

Description

acct 2 test 3A vocab

Updated

2010-10-20T02:34:20Z

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