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  • Note di Apprendimento
  • Revisione degli argomenti
    BabaJide Martins F.
    TR
    BabaJide Martins F.

    The two methods are breakdown to level of understanding. The cash method recognises and records only the receipt and payment of cash. The accrual method recognises and records both credit and cash transactions

    Alice B.
    GQ
    Alice B.

    Records only talk in terms of journals and ledgers while reports include profit and loss, cash budget and balance sheet, to me it means reports go further than just recording.

    Alice B.
    GQ
    Alice B.

    Under accrual basis of accounting, expenses are matched with related revenues and are reported when expenses occur not when the cash is paid.

    Hermina S.
    LC
    Hermina S.

    Is unable to view the video

    Morne V.
    ZA
    Morne V.

    In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers

    Sunday O.
    NG
    Sunday O.

    recognition expense is how to control cash flow

    Elizabeth A.
    NG
    Elizabeth A.

    They have two seperate stage 1. Recognising and recording transactions A transaction is defined as an external event involving the transfer of something of value between two or more entities.

    Odongo M.
    UG
    Odongo M.

    Accounting -> Revenue and expense recognition Revenue and expense recognition Cash and accrual accounting These alternative accounting systems should be treated in two separate stages: Recognising and recording transactions A transaction is defined as "an external event involving the transfer of something of value between two or more entities". The accounting system records the effects of the transactions. It follows that the point(s) at which a firm records depends upon the type(s) of transactions it recognises. There are two methods for recognising and hence recording transactions. a. The cash method; which recognises and records only the receipt and payment of cash. b. The accrual method; which recognises and records transactions both when they are entered into (earned or incurred) and when cash is received and/or paid. This method recognises and records both credit and cash transactions. View the video on small businesses. Determining periodic profit Determination of profit by time periods is a primary function of accounting. The reasons for the determination of accounting profit periodically include the needs of management/proprietors for financial information and legal requirements for individuals to submit personal tax returns. Two bases of determining periodic profit are possible: a. The modified cash basis; under which periodic profit/loss is arrived at after matching revenue (defined as all cash received from operations) against expenses (defined as all cash paid on operations except for the inclusion of adjustments for stock on hand and depreciation of fixed assets). This basis, which is a mixture of the cash and accrual bases, has been developed and used to satisfy the provisions of the Income Tax Assessments Act. Where the firm regularly gives or receives credit, the financial information produced by using this basis of determining periodic profit is not regarded as being sufficiently reliable for management purposes. b. The accrual basis; under which periodic profit/loss is arrived at by matching revenue earned in the period with expenses incurred in that period. The matching principle is important for reliable periodic profit determination. Note: The basis used to determine periodic profit has no necessary connection to the method used for recognising and recording transactions. Balance day adjustments can convert cash transaction records into the accrual basis of profit measurement. Merits Modified cash basis simple to prepare and operate less time consuming tax is only paid on income received, not earned less skill required in report preparation Accrual basis reports are more accurate, particularly where the reporting period is less than one year more accurate reports then lead to better planning for the future performance can be more accurately evaluated in the balance sheet a more detailed list of assets and liabilities are provided Note: When discussing records only talk in terms of journals and ledgers whereas reports include Profit and Loss, cash budgets and balance sheet.

    Manish K.
    NP
    Manish K.

    Information about cash and accrual basis is clearly given in this course. I have no doubt in provided information.

    Davidson Ade O.
    NG
    Davidson Ade O.

    Cash method and accrual are simple to calculate

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