ACC 290 Week 2 Summary - 90401

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Summary In week two I learned that accrual accounting is an accounting method that evaluates the performance of the organization by financial events without regard to when the transaction actually occurs. These financial events are identified by matching the revenues to the expenses at the time in which the transaction takes place rather than when the payment is made / received. I learned that the revenue recognition principle requires that organizations recognize their revenue during the accounting time period that it is earned, not necessarily received. I learned that adjusting entries was necessary so that revenue and expense recognition principles are complied with and that adjustments occur because events are not always recorded daily, some costs expire over time, or because a service has not yet billed. Each time a financial statement is prepared entries must be adjusted to assure that all the financial information is up-to-date. There are two types of adjusting entries – accruals and deferrals. Accruals are accrued revenues and accrued expenses. An example of accrued revenue is when the painter is paid ahead of time and has not performed the job of painting yet...
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In week two I learned that accrual accounting is an accounting method that evaluates the performance of the organization by financial events without regard to when