Financial statements are a product of the accounting cycle. Think about two different companies: a manufacturing company, and a retail company. Why would different companies have different accounting cycles? Would you expect the steps of the accounting cycle to be the same for each company? Why, or why not?
Please provide a constructive example of a business transaction related to cash receipt or made a sale on credit. Please be sure that you are able to identify the two accounts impacted. Why is it important to record your selected transaction?
a. What is an Account, what is Accrual Accounting? Why not just use the simple cash basis? What are some of the benefits of using accrual accounting?
b. What is the adjusting process? Which accounts need to be adjusted? Why is it important to accomplish these updates?
c. What is the difference between a fiscal year and a natural business year?
d. When is revenue generally recognized in the accounting records?
e. Please explain the matching principle
f. What is meant by the term Accounting Cycle?
Please be sure do some research outside your textbook (use your textbook as a reading guide) on this very important discussion topic by visiting different websites and share your thoughts and ideas here with each other.
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