Measuring income – revenues/expenses –Revenues – when earned –Expenses – incurred to generate revenue Accrual accounting – timing differences –Accrual – revenue earned/expense incurred but no cash exchanged Accrued revenues Accrued expenses –Deferral – cash is exchanged before revenue is earned or expense incurred Deferred revenue - Unearned revenue Deferred expense Depreciation expense, accumulated depreciation, contra-asset, residual value, book value

Accounting cycle Accrual transactions –Accrued revenue, accrued expenses –Interest expense, interest revenue Deferral transactions –Deferrals of revenue – unearned revenue –Deferrals of expense – deferred expenses Equipment and depreciation –Depreciation expense, contra-asset, accumulated depreciation, book value Adjusting entries, trial balance

Closing entries –Temporary accounts –Permanent accounts Financial statement analysis –Debt-to-total-assets ratio = –Total liabilities/total assets Business risk, control, ethics –Pre-numbered documents –Segregation of duties –Every part of the business process – sales, collections, purchases, obtaining financing

Assign #7 – pg , E4-1A, E4-2A, E4- 3A, E4-4A, E4-8A, E4-9A Assign #8 – pg. 210, P4-10A