Recognizing Expenses When Incurred Rather Than When Paid
Recognizing Expenses When Incurred Rather Than When Paid
Recognizing Expenses When Incurred Rather Than When Paid
Interim Periods - Dictates that efforts (expenses) should be matched with results
(revenues)
- Monthly and Quarterly time periods
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- Time period that is 1 YEAR in length ( first day of the month until 12
months later which is last day of the month)
Calendar Year
- January 1 to December 31
Accrual-Basis Accounting
Cash-Basis Accounting
ADJUSTING
ENTRIES
Deferrals Accruals
Accrued
Prepaid Revenue Accrued
Unearned Expenses
Expense revenues for
Revenue expenses
expenses paid services
cash received incurred but
in cash before performed but
before services not yet paid
they are used or not yet received
are performed in cash or
consumed in cash or
recorded recorded