ACCTG 215 Notes 2-3
ACCTG 215 Notes 2-3 ACCTG 215
Popular in Introduction to Accounting and Financial Reporting
Popular in Accounting
This 1 page One Day of Notes was uploaded by Shogo Okuda on Tuesday October 28, 2014. The One Day of Notes belongs to ACCTG 215 at University of Washington taught by Wells in Winter2010. Since its upload, it has received 81 views. For similar materials see Introduction to Accounting and Financial Reporting in Accounting at University of Washington.
Reviews for ACCTG 215 Notes 2-3
Report this Material
What is Karma?
Karma is the currency of StudySoup.
Date Created: 10/28/14
ACCTG 215 Notes 23 The Measurement Process Adjusting Entries Adjusting entries to record events that have occurred but that we have not yet recorded Adjusting entries are a necessary part of accrual basis accounting They help to record revenues in the period earned and expenses in the period they are incurred in the generation of those revenues Another bene t is that by properly recording revenues and expenses we correctly state assets and liabilities 4 categories Prepayments Prepaid expense Unearned Revenue Accruals Accrued expenses we paid cash after we incurred the expense and recorded a liability Accrued revenues we received cash after we earned the revenue and recorded an asset Prepaid expense costs of assets acquired in one period that will be expensed in a future period always includes a debit to an expense account and a credit to an asset account Depreciation process of allocating the cost of an asset such as equipment to expense don t reduce it directly from equipment to keep the original cost Unearned revenues company receive cash in advance from a customer for products or services to be provided in the future adjusting entry for an unearned revenue always includes a debit to liability account and a credit to a revenue account Accrued expense when a company has incurred an expense but hasn t yet paid cash or recorded an obligation to pay it still should record the expense We record interest payable in a separate account to keep the balance owed for principal separate from the balance owed for interest Accrued revenue when a company has earned revenue but hasn t yet received cash or recorded an amount receivable it still should record the revenue adjusting entry always includes a debit to an asset account and a credit to a revenue account Adjusting entries are unnecessary 1 When transaction does not involve the recognition of revenues or expenses it will not require month end adjusting entries 2 For transactions that result in revenues or expenses being recorded at the same time as the cash ow An adjusting entry will never include the cash account Adjusted trial balance list of all accounts and their balance after we have updated account balances for adjusting entries