Made at the end of an accounting period to reflect each transaction or event that has not yet been recorded or recorded on the proper period.
question
What are the two basic types of adjusting entries?
answer
Deferrals and Accruals
question
What is the three-step process in adjusting accounts?
answer
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record an adjusting entry to get from step 1 to step 2.
question
Deferrals occur when?
answer
A company paid (or received) cash before expenses (or revenue) are recorded.
question
Accruals occur when?
answer
A company paid (or received) cash after expenses (or revenue) are recorded
question
Deferral Revenue occurs when?
answer
Cash is received before the related revenue is earned.
question
Deferral Expenses occur when?
answer
Cash is paid before the related expense is incurred
question
Accrued Revenue occur when?
answer
Cash is received after the related revenue is earned
question
Accrued Expenses occur when?
answer
Cash is paid after the related expense is incurred.
question
Determine the accounts adjusting entries.
Unearned Revenue
answer
Deferred Revenue
question
Determine the accounts adjusting entries.
Prepaid Expenses
answer
Deferred Expenses
question
Determine the accounts adjusting entries.
Supplies
answer
Deferred Expenses
question
Determine the accounts adjusting entries.
Prepaid Insurance
answer
Deferred Expenses
question
Determine the accounts adjusting entries.
Depreciation
answer
Deferred Expenses
question
Determine the accounts adjusting entries.
Revenue
answer
Accrued Revenue
question
Determine the accounts adjusting entries.
Salary Expenses
answer
Accrued Expenses
question
Identify the account to be debited and the account to be credited:
A company received cash in advance for a service.
answer
debit: unearned revenue
credit: revenue
question
What is your adjusting entry?
A customer paid in advance $1,000 for a service. at year end the company has completed $700.
answer
unearned revenue 700
revenue 700
question
Identify the account to be debited and the account to be credited:
A company used supplies.
answer
debit: supplies expense
credit: supplies
question
What is your adjusting entry?
A company has $1,000 of supplies. Only $500 are left over at the end of the accounting period.
answer
supplies expense 500
supplies 500
question
Identify the account to be debited and the account to be credited:
A portion of a companies prepaid insurance has expired.
What is your adjusting entry?
A company paid $3,000 for insurance coverage for one year. At the end of the accounting period only $1,000 has been used.
answer
Insurance expense 2,000
prepaid insurance 2,000
question
When recording accumulated depreciation, what other account is affected?
answer
An account in assets.
question
What is the acronym to adjusting depreciation? And what does each letter stand for?
answer
Depreciation Expense Accumulated Depreciation
question
A $5000 vehicle is sitting in a garage foe a year. To this day, the vehicle costs roughly $2000. How would you record this?
