Chapter 4

Accounts receivable is a current asset turned into cash

Prepayments are converted to expenses

Accrued expense –wages and salaries (liability side)

Deferred revenue –company receives cash before supplying the service

-other current liabilities – gift cards

Important ( Accrual basis / cash basis )

Items like assets l’s rev’s and expenses are representations

Accountants quantify attributes to be measured with different measures

Historical cost – verifiable

Current value – cash equivalent for a fair trade

Accrual basis of acctng when revenue is recognized