ACC 290 Week 3 Team Reflection Paper

Topics: Generally Accepted Accounting Principles, Income statement, General ledger Pages: 5 (613 words) Published: May 4, 2014


Financial Statements Paper
University of Phoenix
Principles of Accounting 1
Mrs. Madeline Cordero- Delgado
July 22, 2013

Learning Team Reflection

This paper is intended to discuss as a learning team the given topic from accounting principles. The same will cover the difference between accrual basis and cash basis accounting, the creation of adjusting entries, and will also talk about preparing an adjusted trial balance. All of these subjects are important skills and knowledge that an accountant should possess at the time of executing his or her duties. Our team will briefly explain the importance of these tasks.

“The main difference between accrual and cash basis accounting is the timing of when revenues and expenses are recognized.” (www.investopedia.com) The cash method is most used by small businesses and for personal finance. Accrual accounting is the most common method used by businesses. “On the other hand, the accrual method accounts for revenue when it is earned and expenses goods and services when they are incurred.” (www.investopedia.com) The revenue is recorded even if cash has not been received or expenses have been incurred but no cash has been paid. The importance of adjusting financial statement is to maintain these statements current and real with the financial transactions of the company.

Adjusting entries are made to the accounting journals after a trial balance is prepared. Adjustments to revenues and expenses are made and posted by the end the accounting period, and are also posted in the general ledger. The types of adjustments are depreciation, unearned revenues, prepaid expenses, accrued revenues, and accrued expenses. Many times, entries are posted into journals that not necessarily reflect a cash flow on the moment. This transaction are considered credit, and when the money change hands, in other words, money pass from credit to an accrual transaction, an adjustment is made to post money was received from a previous credit to a customer.

The adjusted trail balance is nothing but a list of account balances of a specific ledger accounts, which is created from the preparation of the adjusting financial entries. It has balances of revenues, expenses of assets and of course liabilities and equities. This report is very helpful for the statement of any changes to the stockholders, income statements and for the balance sheet. It may not be used for the statement of cash flow since it does not contain information needed for specific financial notes. This report is similar to the unadjusted trail balance report. This reports final balance must equal the same amount to make sure there are no mistakes.

References

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial accounting: Tools for business decision making (5th ed.). Hoboken, NJ: John Wiley & Sons

http://www.accounting-basics-for-students.com
http://www.investopedia.com/ask/answers/09/accrual-accounting.asp

CERTIFICATE OF ORIGINALITY: I certify that the attached paper is my original work. I affirm that any section of the paper, which has been submitted, previously is attributed and cited as such, and that this paper has not been submitted by anyone else. I confirm that I have cited all sources from which I used language, ideas, and information, whether quoted verbatim or paraphrased. Any assistance I received while producing this paper has been acknowledged in the References section. I have obtained written permission or have included a release from the copyright holder for any trademarked material, logos, images from the Internet, or other sources. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature.  

Student's signature (name typed here is equivalent to a signature): Carlos A. Rivera, Carlos Maldonado, Melissa Clarke, Rodney...

References: section. I have obtained written permission or have included a release from the copyright holder for any trademarked material, logos, images from the Internet, or other sources. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature.
 
Student 's signature (name typed here is equivalent to a signature): Carlos A. Rivera, Carlos Maldonado, Melissa Clarke, Rodney Nazario, Felix Andino.
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