Assigning expenses to the period in which they are incurred

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• Criteria for determining when costs are expenses

  For example advertising costs are period expenses since we cannot say which future revenues are due to current advertising costs and so these are expensed in the same period.

• Adjusting Entries and Routine Entries

  These are the transactions which are of same period or they are of cash basis. They require recording the accounts either on debit side. For example, a company paid salary. In the Cash Payments Journal, you would debit Salary and credit Cash.

• Prime, Coversion, Product and Period Costs

  Examples of period costs are: marketing, selling and administrative expenses, depreciation, and interest etc, Product costs are expensed in the income statement in the period in which they are incurred.

• Accounting 310 problems: Matching terms and journal entries

  . 8 Efforts are related to accomplishments. 9 A cost allocation process. 10 Revenue is recognized in the accounting period in which it is earned.

• Financial Statements and Accounting Basis

  Little effort is made to match revenues to the time period in which they are earned, or to match expenses to the time period in which they are incurred.

• Differentiate between Cash-Basis versus Accrual-Basis

  (d) Accrual basis accounting matches revenues to the time period in which they are earned and matches expenses to the time period in which they are incurred.

• Multiple Choice

  James and John provide lawn mowing services in the local community. During the month of July they incurred the following operating costs to mow 200 lawns.

• Job Order Cost Selling Expenses

  Selling and admnistrative costs are are treated as expenses and deducted from sales revenue in the time in which they are incurred. They will appear on the income statement in the relevant period.

• Accounting for N. Klein and Company

  (E)Advertising expenses incurred in the current month i.e.