Essay on Accural Accounting

682 Words Mar 19th, 2013 3 Pages
Learning Team Discussion
Learning Team A:
Teri Francis, Jamie Geciauskas, Edwin Hung, Anh Tran, Sean Williams
ACC 290
May 14, 2012 Professor Nicole Church

Learning Team Discussion
During week three, Learning Team A discussed different concepts regarding accounting. Some of these key concepts included; the differences between accrual basis and cash basis accounting, adjusting entries, and the adjusted trial balance.
Accrual Accounting In accrual accounting, companies post income when it is earned and expenses are posted when they occur. Accrual accounting is based on the revenue recognition principle and the expense recognition principle. The revenue recognition principle means that revenue is claimed when the service is
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It is important to adjust each of these every accounting cycle to reflect accurately the resources used in creating revenues. Accruals include accrued revenues for services in progress and not yet billed, accrued expenses such as salaries not yet paid, and accrued interest on loans that has not yet been paid. Accurately reporting a company’s revenues and expenses provides internal and external users of revised and accurate data. Without adjusting entries, both groups do not have an accurate representation of the company’s financial status. Adjusting entries ensure against assets, liabilities, expenses, or revenues being over or understated on financial statements.
Adjusted Trial Balance
The purpose of the adjusted trial balance is to make sure that adjusting entries were entered correctly and to prove that the most recent transactions have kept the basic accounting equation balanced. In doing this a company is more confident that the information contained on the updated trial balance is valid. The data contained on the adjusted trial balance can then be used in the generation of accurate financial statements (Kimmel, Weygandt, & Kieso, 2009).
Financial Statements
Financial statements are useful for both internal and external users. Internally, managers use the financial information to strategize and plan goals for the future of the company. Managers may also use the financial statements to evaluate how

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