Balance Day Adjustments

The life of the business is divided into arbitrary time periods - this is known as

• Matching Principle

• Accounting Period Assumption

Revenues which have been earned in the current accounting period but have not yet been paid or recorded.

• Unearned Revenues

• Accrued Revenues

The difference between the revenues earned from the sale of goods and the cost of goods sold.

• Gross Profit

• Net Profit

A detailed expression of the accounting equation for a business at a certain point in time.

• Statement of Profit or Loss

• Statement of Financial Position

This is when revenue is shown in the records ie money than is earnt is recorded in the books.

• Realising the Revenue

• Recognising the Revenue

This Financial Year is between:

• 1 January 2019 - 31 December 2019

• 1 August 2018 - 31 July 20198

• 1 July 2018 - 30 June 2019

Profit = revenues - expenses relates to the following accounting principle:

• Profit Principle

• Matching Principle

• Earning Principle

This is known as when the effects of the transactions are recognised only when cash is received or paid out.

• Cash Accounting

• Accrual Accounting

Occurs when expenses that have been paid and recorded in the current accounting period but will not be incurred until the future accounting period.

• Prepaid Expenses

• Accrued Expenses

Entries made at the end of the Financial Year which match the revenues and expenses accurately so that profit can be determined, and to bring into account assets and liabilities not previously recorded.

• Accrual Accounting

• Balance Day Adjustment

• Recognising the Revenue and Expense