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The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the?
The accruals concept, otherwise known as the matching concept as it's purpose is to match expenses and revenue to each other in the correct accounting period.
By matching revenues and expenses in the same period in which they incur?
By matching revenues and expenses in the same period in which they incur, net income or loss will be properly reported on the income statement.
Net income will result during a time period when?
revenues exceed expenses.
Is a financial statement that summarizes the revenues and expenses for a specific period of time?
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What presents the total revenues and expenses of a company for a given period?
Income Statement
What are the five categories of adjusting entries?
deferred expenses, deferred revenues, accrued expenses, accrued revenues and estimated expensesAdjustments to the enterprise's accounts can only be made in the time period when the business terminates.
How are revenues and expenses reported on the income statement under the accrual basis of accounting?
Revenues are reported on the income statement in the period in which they are earned.
What occurs when expenses exceed revenues for a given accounting period?
Retained earnings are decreased.
What is financial statement that summarizes the revenues and expenses for a specific period of time?
income statement
What does P and L consist of?
The Profit and Loss statement (P&L) mainly consists of revenues, expenses, and resulting net income or loss for a specific period. Revenues represent the income generated from selling goods or services, while expenses include costs incurred to generate that revenue. The net income is the difference between total revenues and total expenses, indicating the profitability of the business for that period.
A net loss will result during a time period when?
When expenses exceed revenues a net loss occurs.
The accrual basis of accounting recognizes the impact of transactions on the financial statements in the period when?
revenues are earned and expenses are incurred
