Ch. 2 Financial Statements and Adjusting Entries

In your personal life, you operate on a cash basis.  In the accounting world, we operate on an accrual basis which allows us to match revenues and expenses to the month that they happen not when cash is received or paid.  We make these entries by using receivable and payable accounts to show future revenue and expenses.

In this chapter, we learn about accrual accounting and review what we learned in Chapter 1.  Remember learning a language requires repetition.