records the revenue when the cash is received and with accrual the company records the revenue when the sale is made. Double-entry bookkeeping - way of recording financial transactions that requires two entries for every transaction so that the accounting equation is always kept in balance Matching principle fundamental principle requiring that expenses – incurred in producing revenue be deducted from the revenues they generate during an accounting period Accrual basis accounting method in which revenue is recorded when a – sale is made and expense is recorded when it is incurred Cash basis accounting method in which revenue is recorded when – payment is received and expense is recorded when cash is paid Deprecation accounting procedure for systematically spreading the cost – of a tangible asset over its estimated useful life Close the books the act of transferring net revenue and expense – account balances to retained earnings for the period Explain the purpose of the balance sheet and identify its three main sections. The purpose of the balance sheet is to show a snapshot of the financial position on a particular date. The balance sheets three main company’s sections are the assets of the company on one side and on the other the liabilities and equity. owner’s Balance sheet statement of a financial position on a particular – firm’s date; also known as a statement of financial position
records the revenue when the cash is received and with accrual the company records the revenue when the sale is made. Double-entry bookkeeping - way of recording financial transactions that requires two entries for every transaction so that the accounting equation is always kept in balance Matching principle – fundamental principle requiring that expenses incurred in producing revenue be deducted from the revenues they generate during an accounting period Accrual basis – accounting method in which revenue is recorded when a sale is made and expense is recorded when it is incurred Cash basis – accounting method in which revenue is recorded when payment is received and expense is recorded when cash is paid Deprecation – accounting procedure for systematically spreading the cost of a tangible asset over its estimated useful life Close the books – the act of transferring net revenue and expense account balances to retained earnings for the period Explain the purpose of the balance sheet and identify its three main sections. The purpose of the balance sheet is to show a snapshot of the company’s financial position on a particular date. The balance sheets three main sections are the assets of the company on one side and on the other the liabilities and owner’s equity. Balance sheet – statement of a firm’s financial position on a particular date; also known as a statement of financial position
Example.IntroBusinessOutline2008.docx