COB 241 Week 3 Notes
COB 241 Week 3 Notes COB 241
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This 2 page Class Notes was uploaded by Charles Miller on Wednesday September 21, 2016. The Class Notes belongs to COB 241 at James Madison University taught by Dr. Irving in Fall 2016. Since its upload, it has received 5 views. For similar materials see Financial Accounting in Business at James Madison University.
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Date Created: 09/21/16
Week 3 Notes Adjusting Entries Three absolutes when it comes to adjusting entries o Always occur at the end of a reporting period o Adjusting entries never involve cash o Adjusting entries always involve an Income Statement Account and a Balance Sheet account Deferrals: Adjust for an asset or liability at the end of reporting period t for which cash was paid or received in advance Accruals: Record an expense/liability or asset/revenue at the end of reporting period t before paying or receiving cash Depreciation: For a long term asset, an amount is charged to expense at a constant rate over the asset’s life The Adjusting entry will never involve cash Blueprint for AJE Deferrals (prepaid expenses, Unearned Expense, Supplies) o Original Cash entry that occurs during the reporting period t o Adjusting entry occurs at the end of reporting period t Accruals (Accrued expense/revenue) o Adjusting entry occurs at the end of the reporting period t o Subsequent cash entry occurs at the end of reporting period t Depreciation o Original cash entry is made at the date of purchasing a long term asset in reporting period t o Adjusting entry occurs at the end of reporting period t
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