Week 3 Summary
This week’s lesson on accrual basis and cash accounting was very informative. I learned that accrual basis accounting that in most cases accrual basis accounting is preferred over cash basis. Accrual basis accounting is adhered to regardless if cash changes hands. Cash basis accounting is only recognized when cash is received. Also learning the adjusting entries are prepared before the financial statements are prepared. Adjusting entries are made to ensure that the company's financial records adhere to the revenue recognition and matching principals.
Overall this week’s lesson will bring closer to understanding the accounting process as a whole.