Chapter 3 - Adjusting the accounts. The following will be discussed in this chapter: Explain the time period assumption, explain the accrual basis of accounting, explain the reasons for adjusting entries, identify the major types of adjusting entries, prepare adjusting entries for deferrals. | Preview of Chapter 3 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Accounting in Action 3 Adjusting the Accounts Learning Objectives After studying this chapter, you should be able to: [1] Explain the time period assumption. [2] Explain the accrual basis of accounting. [3] Explain the reasons for adjusting entries and identify the major types of adjusting entries. [4] Prepare adjusting entries for deferrals. [5] Prepare adjusting entries for accruals. [6] Describe the nature and purpose of an adjusted trial balance. Generally a month, a quarter, or a year. Accountants divide the economic life of a business into artificial time periods (Time Period Assumption). LO 1 Jan. Feb. Mar. Apr. Dec. . . . . . Alternative Terminology The time period assumption is also called the periodicity assumption. Timing Issues Monthly and quarterly time periods are called interim periods. Most large companies must prepare both quarterly and annual financial statements. Fiscal Year = Accounting time period that is one year in length. Calendar Year = January 1 to December 31. LO 1 Fiscal and Calendar Years Timing Issues The time period assumption states that: revenue should be recognized in the accounting period in which it is earned. expenses should be matched with revenues. the economic life of a business can be divided into artificial time periods. the fiscal year should correspond with the calendar year. LO 1 Review Question Timing Issues Accounting in Action 3 Adjusting the Accounts Learning Objectives After studying this chapter, you should be able to: [1] Explain the time period assumption. [2] Explain the accrual basis of accounting. [3] Explain the reasons for adjusting entries and identify the major types of adjusting entries. [4] Prepare adjusting entries for deferrals. [5] Prepare adjusting entries for accruals. [6] Describe the nature and purpose of an adjusted trial balance. Accrual-Basis Accounting Transactions recorded in the periods in which the events occur. . | Preview of Chapter 3 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Accounting in Action 3 Adjusting the Accounts Learning Objectives After studying this chapter, you should be able to: [1] Explain the time period assumption. [2] Explain the accrual basis of accounting. [3] Explain the reasons for adjusting entries and identify the major types of adjusting entries. [4] Prepare adjusting entries for deferrals. [5] Prepare adjusting entries for accruals. [6] Describe the nature and purpose of an adjusted trial balance. Generally a month, a quarter, or a year. Accountants divide the economic life of a business into artificial time periods (Time Period Assumption). LO 1 Jan. Feb. Mar. Apr. Dec. . . . . . Alternative Terminology The time period assumption is also called the periodicity assumption. Timing Issues Monthly and quarterly time periods are called interim periods. Most large companies must prepare both quarterly and annual financial statements. Fiscal Year = Accounting .
