Weekly Reflection Acc290

Good Essays
Learning Team Weekly Reflection
The third week of class, Team “C” collaborated together and shared our understanding for chapter four. The objective was to identify the difference between accrual basis and cash basis accounting, create adjusting entries, and prepare an adjusted trail balance.
Differentiate between Accrual Basis and Cash Basis Accounting Accrual basis is a process in which companies use to show a change in their financial statements. These changes are recorded for the period of when these events occurred. Whether or not cash is exchanged these recordings are still recorded. When this process of accounting is used a company is recognizing revenue when it is earned which is also called the revenue recognition principle. Companies will also recognize when revenue is incurred known as the matching principle. The cash basis accounting is a process company’s use only when cash is received. This process is also recorded also when cash is paid. This process is generally prohibited as an accepted accounting process due to its inability to record revenue when earned. This process also does not record expenses incurred.
Create Adjusting Entries (Freddy)
The importance of knowing how to adjust entries is to ensure that the revenue and matching principles are followed (Kimmel, Weygandt, & Kieso, 2009). It is necessary because when a trial balance is prepared, the information may not be current. The adjustments need to be made when financial statements are prepared because it is counter-productive to record some events on a daily basis. The entries affected by adjusting entries are prepaid expenses, insurance, depreciation, and supplies (Kimmel, Weygandt, & Kieso, 2009).

Prepare an Adjusted Trial Balance
The intention of an adjusted trial balance is to display the cause of all financial events that has occurred throughout the accounting period. The trial balance shows the balances of all accounts which also include those that have been adjusted at



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.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Acc/290 Week 3

    • 286 Words
    • 2 Pages

    There have been several concepts learned and discussed that will be beneficial to persons holding positions in the accounting field. Some skills required to be successful are; differentiating between accrual-basis and cash-basis accounting, detailing what creating adjusting entries entails, and the logistics of preparing an adjusted trial balance.…

    • 286 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    The object of the reflection for this week is to discuss the objectives for Week One and their relation to the importance of the balance sheet to internal and external users. The objectives discussed by Learning Team A are the components of cash and cash equivalents, and the comparison and contrast of different inventory cost flow assumptions and how they are valued. The internal users are indentified as management and the external users are investors and creditors.…

    • 691 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Brandywine Homecare

    • 870 Words
    • 4 Pages

    4. Explain the difference between cash and accrual accounting. Be sure to include a discussion of the revenue recognition and matching…

    • 870 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Woodlawn Case Part 3

    • 672 Words
    • 3 Pages

    There are several necessary journal entries that have been made to adjust the unadjusted trial balance.…

    • 672 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Weekly Reflection Week2

    • 969 Words
    • 3 Pages

    The information that I was having a problem with in last week’s reading was dealing with Notes Receivables. I was having a hard time taking in why and where it would be coded on the books. I took a little extra time this week to gather information so therefore I could have a better understanding. Notes receivable is an asset of a company, bank or other organization that holds a written promissory note from another party. For example, if a company lends one of its suppliers $10,000 and the supplier signs a written promise to repay the amount, the company will enter the amount in its asset account Notes Receivable. The supplier will also enter the amount in its liability account…

    • 969 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Financial Accounting Quiz

    • 1139 Words
    • 5 Pages

    After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the…

    • 1139 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Cash basis accounting and the accrual basis accounting are two accounting methods used to keep track of a business’s income and expenses. In accrual basis accounting, revenue is recorded as it is earned and expenses are recorded when they generate revenue. Under cash basis accounting, only transactions involving increases or decreases of the entity’s cash are recorded. One of the major differences is the reporting of net income and net cash flows from operations. The cash basis is the more commonly used method of accounting by individuals and small businesses with sales of less than $5 million per year whereas accrual basis is used by large companies and is required of corporations whose stock is publicly traded.…

    • 308 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    This Statement relies on a basic premise of generally accepted accounting principles that accrual accounting provides more relevant and useful information than does cash basis accounting. Accrual accounting goes beyond cash transactions and attempts to recognize the financial effects of noncash transactions and events as they occur. Recognition and measurement of the accrued obligation to provide…

    • 1133 Words
    • 5 Pages
    Better Essays
  • Good Essays

    trial balance

    • 1080 Words
    • 5 Pages

    Trial balance is based on the double-entry principle of debit equals credit or credit equals debit. As a result, the debit and credit columns of trial balance must always be equal. If they do, it is assumed that the recordings of financial transactions are accurate. Conversely, if they do not, it is assumed that they are not arithmetically accurate. Therefore, one important purpose of preparing trial balance is to provide a check on the arithmetical accuracy of the recordings of the financial transactions.…

    • 1080 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Basic Accounting 101

    • 277 Words
    • 2 Pages

    e. Preparation of the Adjusted Trial Balance– Contains both Real / Permanent and Nominal / Temporary Accounts…

    • 277 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Accrual and cash-based accounting offer two different styles of tracking the flow of money in a business. Each serves a purpose and to understand this idea one must first realize the how one varies from the other. Accrual-based accounting can be described as any transaction that changes a company’s financial statement is recorded in the accounting period the transaction was recorded. Such transactions are recorded even if the actual exchange of money did not occur at that particular time.…

    • 319 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    acct closing process

    • 1176 Words
    • 5 Pages

    References: Spiceland, J. D., Sepe, J. F., & Nelson, M. (2012). Intermediate accounting (7th ed., combined ed.). New York: McGraw-Hill Irwin.…

    • 1176 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.…

    • 414 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    It is commonly known that most commercial and general accounting principles use accrual based accounting over cash based accounting. Accrual based accounting is more advanced than cash based accounting so that is why most accountants chose this over the latter.…

    • 370 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    The lecture last night discussed accrual accounting concepts such as timing issues, and the basics of adjusting entries. The discussion went into more detail on periodicity assumption and how accounting divides the economic life of a business into artificial time periods. These time periods are generally a month, a quarter, or a year, now whether it is a fiscal year or a calendar year that is determined by the company itself. The lecture then reviews the revenue recognition principle which expects companies to acknowledge revenue in the accounting period for which it is earned. Now the expense recognition principle (matching principle) dictates that efforts (expenses) be matched with results (revenues). The lecture lightly discusses “cooking the books” then immediately goes into the difference between accrual versus cash basis of accounting. Accrual accounting is when companies identify profits when earned, even if cash is not received. Cash-basis accounting records revenue only when cash is received, and only records expense when cash is paid. Thus cash-basis accounting violates the revenue and expense recognition principles. The discussion then went into the basic adjusting of entries which ensures that the revenue and expense recognition principles are followed. Adjusting entries are categorized as either deferrals (prepaid expense or unearned revenue) or accruals (accrued revenue or accrued expense). The lecture then discussed adjusting entries for pre-paid expense, when expenses are pre-paid an asset account will be debited to illustrate the service that the company will receive in the future. Pre-paid expenses are costs that expire with the passing of time (e.g., rent and insurance) or through use (supplies). Now recording this daily would be impractical and unnecessary, companies postpone the acknowledgment of these costs until they prepare financial statements, they then make adjusting entries accordingly. The lecture also discussed adjusting entries for…

    • 335 Words
    • 2 Pages
    Good Essays