About This Chapter
Accrual-Based Accounting System - Chapter Summary
In this chapter, you will find video and text lessons addressing the many aspects of accrual-based accounting. You will study details about depreciation and accelerated depreciation, product and period costs, accrued expenses and more.
Lessons define relevant terms and provide examples of each topic so you can develop a deeper understanding of methods and approaches used in this accounting system. You will review how it is applied in areas of expense reporting, revenue and assets. When you complete this chapter, you should be able to:
- Apply accrual accounting methods to improve financial statements
- Compare accrual and cash-basis accounting
- Define and provide examples of accrued expenses and accrued revenues
- Use the liability approach of recording prepaid revenue
- Relate types of stock valuation models and discuss stock management options
- Describe methods of depreciation and accelerated depreciation and reporting depreciation on the balance sheet
- Account for asset disposal and disposal of non-current depreciable assets
- Explain details about period costs and product costs in accounting
These lessons make it quick and simple to go over this accounting topic with expert instruction and 24/7 accessibility. Review the lessons as often as needed to ensure your full understanding and take self-assessment quizzes to determine your level of knowledge before moving on through the chapter. Track your progress using your Dashboard and contact instructors via a short online form if you have any questions regarding this material.
1. Using Accrual Accounting to Make Financial Statements More Useful
What is the relationship between the financial statements and accrual accounting? Do you know? By the time this lesson is over, you will not only know what the relationship is between the two but also why that relationship is important.
2. The Differences Between Accrual & Cash-Basis Accounting
There are two accounting methods that companies can choose from when deciding how they want their books done. They are cash basis and accrual basis. In this lesson, you will learn the differences between the two.
3. Accrued Expenses & Revenues: Definition & Examples
Accruals are a part of the accounting world for most businesses. In this lesson, you will learn about two important parts of the concept of accruals: accrued revenue and accrued expenses.
4. Accounting Liability Approach of Recording Prepaid Revenue
Whenever a business receives income before actual delivery of a good or service, the amount needs to be accounted for. In this lesson, we will step through the liability approach of recording this prepaid revenue.
5. Stock Valuation Models: Types & Overview
In this lesson, we'll learn how to use stock valuation models to determine whether to invest in a company. We'll also review a hypothetical company using various stock valuation formulas.
6. How to Purchase Non-Current Depreciable Assets
In this lesson, we will discuss non-current depreciable assets, how to purchase them, and how to enter the purchase in the general journal. Examples are provided to show how to assess the cost and the bookkeeping for the purchase of non-current assets.
7. Methods of Depreciation
After watching this video lesson, you will understand the differences between the different depreciation methods that are available to you. We will discuss three different methods depending on how you use the equipment that you want to calculate the depreciation for.
8. Accelerated Depreciation Methods
When it comes to calculating depreciation amounts for large office equipment or vehicles, there are two common methods that allow you to calculate more depreciation in the first few years of the product's life. Learn about them in this video lesson.
9. Reporting Depreciation on the Balance Sheet
In this video lesson, we talk about how to report depreciation on the balance sheet versus the income statement. Learn why the numbers may be different.
10. How to Account for Asset Disposal
Capital assets are items the company owns that are used to generate revenue, such as equipment and machinery. In this lesson, you will learn about three methods to dispose of a capital asset: sale, retirement or exchange.
11. Disposal of Non-Current Depreciable Assets in Accounting
Sometimes we need to sell assets. These assets may have depreciated in value. This lesson will discuss how to account for the disposal of non-current assets that have depreciated in value.
12. Period Costs in Accounting: Definition & Examples
In this lesson, we'll discuss the importance of accurately determining period costs. We'll also review accounting principles associated with classifying costs and examine types of period costs.
13. Product Costs in Accounting: Definition & Examples
This lesson provides the definition and example of what product costs are, how they differentiate from period costs, and how they are used on a cost of goods manufactured schedule in relation to financial statements.
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Other chapters within the VCE Accounting: Exam Prep & Study Guide course
- Establishing a Small Business
- Funding for Small Businesses
- Budgeting in Business
- Overview of Service & Trading Businesses
- Business Analysis Overview
- Price Setting Strategies for Business
- Financial Statements Overview
- Overview of Accounting Basics
- Overview of the Accounting Cycle
- Internal Control Use in Accounting
- Technology in Accounting
- Double-Entry Accounting Overview
- Journals in Accounting
- VCE Accounting Flashcards