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What occurs when expenses exceed revenues for a given accounting period?
Retained earnings are decreased.
Are revenues the same as net income?
Revenues are earnings from sales of products and net income is the difference between revenues and expenses.
What effect do revenues and expenses have on retained earnings?
Revenues Increase and Expense Decreases.
When are revenues reported?
Under the accrual basis of accounting, revenues are reported in the accounting period when the services or goods have been completed. This is answer to question 3 on the Accounting Basics quiz.
What is the definition of 'Accrual Accounting'?
Accrual Accounting is a method of accounting of keeping track of revenues and expenses no matter when the exchange occurs. Revenues are money received and expenses are moneys going out of the business.
What are the subdivisions of owners equity?
the four subdivision of owner's equity are: Capitals Withdrawls Expenses Earnings (Revenues) DO NOT MISTAKEN ACCOUNT PAYABLES & RECEIVABLES AS BEING EXPENSES AND EARNINGS or REVENUES :)
What are The four subdivisions of owner's equity?
the four subdivision of owner's equity are: Capitals Withdrawls Expenses Earnings (Revenues) DO NOT MISTAKEN ACCOUNT PAYABLES & RECEIVABLES AS BEING EXPENSES AND EARNINGS or REVENUES :)
Matching revenues and expenses refers to?
Matching revenues and expenses is called "Matching concept" of Accounting.
What is an accounting loss?
It is when revenues are less than expenses.
What is one way in which accrual accounting can be used in earnings management?
Revenues are recorded when the sale transaction is complete, not when the customer makes payment, but management must then estimate what proportion of those credit sales will not be collected in the future.
What account to which revenue and expenses are closed is called?
The account to which revenue and expenses are closed at the end of an accounting period is called the "Retained Earnings" account. This process is part of the closing entries in the accounting cycle, where temporary accounts (revenues and expenses) are zeroed out and their balances are transferred to Retained Earnings, reflecting the net income or loss for the period. This helps in maintaining an accurate record of the company's equity over time.
What happens after all the closing entries?
After all the closing entries are made, the temporary accounts (like revenues and expenses) are reset to zero, which prepares them for the next accounting period. The net income or loss is transferred to the retained earnings account, reflecting the company's cumulative earnings. Following this, the financial statements can be prepared for the new period, providing a clear picture of the company's financial position moving forward. Finally, the accounting cycle begins anew with the opening of the new accounting period.
