▲ Cash Basis Accounting In cash-basis accounting, however, the accountant does not record a transaction until cash is received or paid. Cash receipts are treated as revenues and cash disbursements are handled as expenses.
8.3.2 The Accounting Period
▲ businesses need periodic reports on their progress; ▲ accountants slice time into small segments and prepare financial
statements for specific periods; ▲ the most basic accounting period is one year.
Unit 8 The Measurement of
Business Income
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葛军 吴晓华
高等教育出版社
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Outline of Unit 8
8.1 Revenues and Expenses 8.2 Business Income 8.3 Some Generally Accepted Accounting Principles 8.4 Adjustment to the Accounts 8.5 Adjusted Trial Balance 8.6 Preparing the Financial Statements from the Adjusted Trial Balance
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7 8.2 Business Income
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8 8.3 Some Generally Accepted Accounting Principles
8.3.1 Accrual-Basis Accounting
▲ Accrual Basis Accounting In accrual-basis accounting, an accountant recognizes the impact of a business event as it occurs. When the business performs a service, makes a sale or incurs an expense, the accountant enters the transaction into the books, whether or not cash has been received or paid
8.3.3 Revenue Principle
▲ revenue should be recorded as it has been earned but not before ▲ to tell accountants: when to record revenue and the amount of revenue to
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4 8.1 Revenues and பைடு நூலகம்xpenses
Expenses:
▲ Expenses are ‘outflows or other using up of assets or incurrence of liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations’. In other words, they are the costs of the goods and services used up in the course of gaining revenue.
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5 8.1 Revenues and Expenses
Expenses:
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6 8.2 Business Income
Definition: ▲ Net income is the net increase in owners' equity resulting from the profit-seeking operations of the company; ▲ Net income equals the difference between revenues and expenses:
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8.1 Revenues and Expenses
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Revenue:
▲ Revenues are ‘inflows or other enhancements of assets of an entity or settlement of its liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s major or central operations’.
record;
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9 8.3 Some Generally Accepted Accounting Principles
8.3.1 Accrual-Basis Accounting
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10 8.3 Some Generally Accepted Accounting Principles