Accrual And Cash Basis Of Accting Flashcards
Advances for commissions when talking about how to report commissions expenses are
Irrelevant because they talk about how they were paid instead of recognized
When handling advertising expense on the income statement fees that relate to another year should be
Excluded and fees billed in the subsequent year but relate to the current year should be included
When handling prepaid expenses you take the
Beg balance
- amortizing any premiums that have expired
+ annual payment
- part of the payment that carries over to the next year
+ advance payments
Accounts are recognized as a current asset and expense when
A prepayment of two years has expired in one (expensed) the remaining balance is deemed current for use for the second year
When expenses increases it represents that
Cash was paid then expensed
Accrued liabilities increases are subtracted from
Cash because cash was not received
Professional fees expense add fees that
Were not included for services performed in that year
Pushing cash sales and credit sales to determine net revenue is
Gross - returns and allowances
Beg accts rec plus net credit sales (gross - discounts)
- ending accts rec
= cash collected from credit sales
Prepaid expenses report the unexpired
Balance since the expense was used during the year.
When looking at sales you have to consider the difference in
Accounts receivable and either add or subtract based on the change
Insurance expense can include remaining prepaid expense portion and
The remaining trial balance
The net amount earned by an artist represents
Royalty expense
Sales maybe reported as
Beg balance + sales - collections - write offs = ending balance
