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About this document
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- 5 pages
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- Format
- Subject
- Accounting
This document explains what adjusting entries are, and the different methods and accounts that need to be adjusted. It is useful for understanding how to adjust expenses and revenues to the correct accounting period.
What's inside
- Definition of adjusting entries
- Types of adjusting entries
- Methods in adjustment
- Accounts that need to be adjusted
- Examples of adjusting entries
Who it is for: Students studying accounting. (Undergraduate)
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Summary
Adjusting entries are journal entries made at the end of an accounting period. They adjust expenses and revenues to the correct period. Students learn about the types of adjusting entries and the methods used to make them.
Adjusting entries and their types
Adjusting entries are journal entries made at the end of an accounting period. They adjust expenses and revenues to the correct period. Six types of adjusting entries are described: accrued revenues, accrued expenses, unearned revenues, prepaid expenses, depreciation and bad debts.
Methods of adjustment
Two methods of adjustment are explained. The expense method debits an expense upon payment. The asset method debits an asset account upon payment. Each method is explained with examples.
Accounts to be adjusted
Examples of accounts that need to be adjusted are listed. Each example shows a debit and a credit entry. The examples include salaries, depreciation, unearned service revenue and insurance.
Key terms
- Adjusting entries
- Journal entries made at the end of an accounting period to adjust expenses and revenues.
- Accrued revenues
- Income earned but not yet collected by the end of the accounting period.
- Prepaid expenses
- Expenses paid for and gradually used during the accounting period.
- Depreciation
- The process of allocating the cost of an asset over its serviceable life.
- Expense method
- A method of adjustment that debits an expense upon payment.
- Asset method
- A method of adjustment that debits an asset account upon payment.
Questions this document helps with
- What are the six types of adjusting entries?
- How do the expense method and the asset method differ?
- Which accounts need to be adjusted at the end of an accounting period?
Summary written with AI from the document's text.
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