12/6/24
Financial statement concepts
Accounting Methodology
§ Cash basis – accounting method that recognizes revenues and expenses at the time cash is received or paid out § Accrual basis – revenues and expenses are recognized in the period they are earned or realized
US GAAP requires financial statements to be presented on the accrual basis of accounting
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Accrual basis accounting example
§ Casino placed a food and beverage order on December 10, 2024 § Casino received a shipment of the F&B inventory on December 30, 2024 § Casino received the invoice from the vendor on January 4, 2025 § Casino paid the invoice on February 1, 2025
Under accrual accounting, when should this be recorded as a liability?
ANSWER : December 30, 2024
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