[学习笔记] 【学习笔记】Accruals are made to record -revenues for services performed ... [推广有奖]

Accruals are made to record
-revenues for services performed but not yet recorded at the statement date
-Xs incurred,but not yet paid or recorded at the statement date

Accured revs
revenue recored before cash receipt / rent , services performed , interest

Adjusting entry
increases (debits) an asset acc and
increases (credits) a revenue acc

Accrued Xs
X recorded before cash payment / interest,taxes,salaries

Adj entry
inc(dr) an x acc n
inc(cr) a liability acc

Preparing the adjed trial bal
prepared after all adjing entries are journalized and posted
purpose is to prove the equality of debit balances Nd credit balances in the ledger
is the primary basis for the preparation of financial statements

Adjusted trial balance directly - income statement retained earning stm stm of financial position

Alternate treatment
when a company prepays an expense, it debits that amount to an expense acc
when it receives payment for future services, it credits the amount to a revenue acc
Prepaid Xs: Dr. assets Cr. Xs /  Unearned revenues: Dr. revs Cr. liabilities

qualities of useful info
two fundamental qualities
relevance
-make a difference im a business decision
-provides info that has predictive value and confirmatory value
-materialitu is a company-specific aspect of relevance(an item is material when its size makes it likely to influence the decision of an investor or creditor)
faithful representation
-info accurately depicts what really happened
-info must be complete, neutral and free from error

enhancing qualities
comparability
verifiable
Understandability
consistency
timely

assumptions in financial reporting
monetary unit /economic entity/time period/going concern

principles of FR
measurement PRs historical cost / fair value /revenue recognition PR/expense recognition PR/ full disclosure PR

IFSR versus GAAP
similarities
-accrual-basis rather than cash-basis
-time-period assumption
-the form and content
-revenue recognition fraud

differences
-more rules for revenue recognition for GAAP( many industry-specific) while  the general rev rec prs were similar for the two standards
-internal control SOX for US companies
-under IFRS revaluation to fair value of items such as land and buildings is permitted.This is not permitted under GAAP
-Under IFRS, the term \"income\" includes both revenues , which arise during the normal course of operating activities, and gains, which arise from activities outside of the normal sales of goods and services. under GAAP income refers to the net difference between revenues and expenses. Expenses under IFRS include both those costs incurred in the normal course of operations, as well as losses that are not part of normal operations. this is in contrast to GAAP, which defines each separately