Summary
Chapter 3: Accrual Accounting Summary
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Chapter 3: Accrual Accounting Summary
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Ch Accural & financial statement3-
Businesses
Accounting
double however
entry
-
use
accounting system
-
.
accountants make adjustments at the end of the
many
accounting period .
Accrued requires that any incomplete activities be
accounting
:
in financial statement
recognizedCrecoded )
→
accountant adjust account to reflect
activity properly
Cash basis (
regardless of earned)
Accounting revenue recorded when cash reciaed
-
:
and recorded the
expenses same .
→
exchange of cash ≠
recognition of revenue d.
expend
to the business
Accrual Caecum IFRS & ASPE
basis
accounting accounting) nee
-
:
-
revenue recorded when earned & matched to help
expenses when
produce revenue .
•
Accrued records both cash and non -
cash transactions
'
net on accrual will be different to net earnings cash basis
earnings
-
- -
on .
, A
Elements of Accrual Accounting
Periodic Assumptions
are divided
Operations
information.
into time
periods to meet stakeholder's demand for
(quarter, month,year...)
&
recognition principle
(RRP)
RRP determing when revenue is recorded and
reported.
·In IFRS, revenue will be
recognized when control over
good or service is transferred
to the customer
Conditions required for
to bemet
recognizing revenue:
① the contractess
Identify with customer
③Identify the performance obligation in the contract
③ Determine the darsaction
price
④ Allocate the transaction
price to the
performance obligation in the contract
③
Recognize revenue as the business
entity satisfes the
performance obligation.
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