Accounting for Deferrals
SuperDels Statement of Changes in Equity Period Ended 20X8 |
|
|
|
Beginning Contributed Capital |
4,400 |
Plus: Capital Acquisition |
3,000 |
Ending Contributed Capital |
7,400 |
|
|
Beginning Retained Earnings |
500 |
Plus: Net Income |
2,900 |
Ending Retained Earnings |
3,400 |
|
|
Total Equity |
$10,800 |
SuperDels |
|
Assets |
|
Cash |
$ 6,700 |
Accounts Receivable |
1,000 |
Prepaid Insurance |
300 |
Supplies |
200 |
Car |
4,000 |
Less: Accumulated Depreciation |
(1,400) |
Land |
0 |
Total Assets |
10,800 |
Liabilities |
|
Unearned Revenue |
$0 |
Total Liabilities |
0 |
|
|
Equity |
|
Contributed Capital |
7,400 |
Retained Earnings |
3,400 |
Total Equity |
10,800 |
|
|
Total Liability and Equity (Claims) |
10,800 |
SuperDels Statement of Cash Flows For the Period Ended 20X8 |
|
Cash Flows from Operating Activities |
|
Cash Receipts from Revenue |
$4,000 |
Cash Payments for Insurance |
(1,200) |
Cash Payments for Supplies |
(500) |
Cash Payments for Operating Expense |
(1,400) |
Net Cash Flow from Operating Activities |
900 |
|
|
Cash Flows from Investing Activities |
|
Cash Receipt from Land Sale |
700 |
Net Cash Flow from Financing Activities |
700 |
|
|
Cash Flows from Financing Activities |
|
Cash Receipts from Contributed Capital |
3,000 |
Net Cash Flow from Financing Activities |
3,000 |
|
|
Net Increase in Cash |
4,600 |
Plus: Beginning Cash Balance |
2,100 |
|
|
Ending Cash Balance |
$6,700 |
Final note here. Usually, if there is a zero balance in the financial statements or zero activity, such balances or activity are not shown. For example, that relates to the Land or Unearned Revenue accounts on the balance sheet at 20X8 end. We retained those accounts for you to understand that such balances went from non-zero balances in 20X7 financial statements to zero balances in 20X8 financial statements.
3.2.13 Summary of accruals and deferrals
As we have covered several types of accruals and deferrals, it is beneficial to summarize them. See below for the summary with related examples:
Illustration 3-24: Summary of accruals and deferrals
Deferrals |
|
Prepaid expenses |
Example: Payment for one-year insurance in advance |
Unearned revenue |
Example: Receipt of cash for services not yet performed |
|
|
Accruals |
|
Accrued expenses |
Example: Recognition of salary payable before cash is paid |
Accrued revenue |
Example: Recognition of interest receivable before cash is received |
Page 10 of 10
Location