The Accounting Period
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1 2 3 4 5 6 7 8 9 10 11 12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Accrual Basis vs. Cash
Accrual Basis Cash Basis
Revenues are Revenues are
recognized when recognized when
earned and expenses cash is received and
are recognized when expenses recorded
incurred. when cash is paid.
An adjusting entry is recorded to bring an asset or
liability account balance to its proper amount.
Framework for Adjustments
預付項目 Deferred Items 應收項目Accrued Items
Prepaid Unearned Accrued Accrued
(Deferred) (Deferred) expense revenues
Here is the check
for my first
Resources paid 6 months’ rent.
for prior to
Unadjusted Credit Debit
Balance Adjustment Adjustment
Cash received in
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Debit Unadjusted Credit
Adjustment Balance Adjustment
Revenues earned Yes, I’ve completed your
in a period that tax return, but have not had
time to bill you yet.
not yet received.
Costs incurred in a We’re about one-half
done with this job and
period that are
want to be paid for
both unpaid and our work!
Depreciation is the process of computing expense
from allocating the cost of plant and equipment
over their expected useful lives.
Straight-Line Asset Cost - Salvage Value
Expense Useful Life