A. Revenues and expenses are recognized when cash is received or paid B. Revenues are recognized when earned, and expenses are recognized when incurred C. All transactions are recorded in the period in which they occur D. Only cash transactions are recorded ...
Revenue is the amount earned from a company’s main operating activities, such as a retailer selling merchandise or a law firm providing legal services. Definition of Gain In accounting, a gain is the result of a peripheral activity, such as a retailer selling one of its old delivery trucks...
Generally accepted accounting principles require that revenues are recognized according to the revenue recognition principle, which is a feature of accrual accounting. This means that revenue is recognized on the income statement in the period when realized and earned—not necessarily when cash is receiv...
Retained earnings are the cumulative net earnings or profits of a company after accounting for dividend payments. As an important concept in accounting, the word “retained” captures the fact that because thoseearningswere not paid out to shareholders as dividends, they were instead retained by the...
Reversing entries are made on the first day of an accounting period to remove accrual adjusting entries that were made at the end of the previous accounting period. Two benefits of using reversing entries are: It greatly reduces the chance of double-counting revenues and/or expenses, and It al...
How Does Reconciliation in Accounting Work? Types of Reconciliation What are the Steps in Account Reconciliation? What are Common Account Reconciliation Discrepancies? Consolidation and account reconciliation What are the Risks of Not Reconciling Bank Statements? What’s the Purpose of Account Reconciliati...
What are accrued expenses payable in accounting? Accrued expenses payable: Accounts in businesses are classified depending on the reason the cash has been introduced in the business. Generally, cash flows include profits earned and losses accrued in the business during its operations. ...
What are unearned revenues? What is the difference between accrual and deferral in accounting? What is a T-account in accounting? Does an income summary balance go on the trial balance in accounting? What is an income tax expense on a financial statement? What is a static budget income state...
1. What is the time period 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...
What are the roles of accounting in a business? What are revenues and expenses? How do they determine a business’s profitability? Can anyone explain the basic accounting equation: Assets = Liabilities + Equity? What are the differences between financial and managerial accounting? Why might a com...