ACC 290 WEEK 2

ACC 290 WEEK 2

ACC 290 Week 2 Complete,

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Accrual accounting is the reporting of revenues and expenses in the period of time that they occur, even if payment was not received or paid. Generally accepted accounting principles state that all revenues and expenses need to be reported during the time period that they occur. The cash-basis of accounting is the recording of revenue and expenses when payment is received and paid-out.

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In order for organizations to provide reliable, relevant, and transparent financial information to owners, managers, investors, lenders, and the IRS they must use accrual based financial

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It is necessary for organizations to adjust entries so that revenue and expense recognition principles are complied with. In an accrual accounting system revenues must be recorded in the

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The trial balance is prepared when the ledger accounts have been balanced at the end of the specific accounting period. Debits are listed on the left side of the “T” and credits are listed on the The trial balance is prepared when the ledger accounts have been balanced at the end of the specific accounting period. Debits are listed on the left side of the “T” and credits are listed on the right. Both sides of the trail balance must balance. The trail balance tells me that the debits (left) and the credits (right) match or that they balance. The trail balance also might identify errors that could have been made when posting and journalizing. The trail balance is also a precursor to preparing financial statements. The trail balance does not tell you that ledger is correct. Some transactions may not have been posted, been posted repeatedly, amounts could be incorrect, or some

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Week 2 Assignment

E3-4

(a)  1. Stockholders invested $20,000 cash in the business.

2. Purchased equipment for $5,000, paying $1,000 in cash and the balance of $4,000 on account.

3. Paid $750 cash for supplies.

4. Earned $9,500 in revenue, receiving $4,100 cash and $5,400 on
account.

5. Paid $1,500 cash on accounts payable.

E3-9

General Journal

Date Account Titles Debit Credit
May  4 Accounts Payable
Cash

700
700

7 Accounts Receivable
Service Revenue

6,800
6,800

P3-5A

(a)

Date Account Titles and Explanation Debit Credit
Apr. 1 Cash
Common Stock

(Issued shares of stock for cash)

18,000
18,000

1 No entry—not a transaction.
2 Rent Expense
Cash

(Paid monthly office rent)

900
900

ACC 290 WEEK 2