ADJUSTING JOURNAL ENTRIES

Adjusting journal entries are the journal entries that bring the accounts up to date
at the end of the accounting period. All adjusting entries affect at least one
income statement account and one balance seet account and NE!ER
im"act cas#
DE$ERRED RE!ENUE
%UNEARNED RE!ENUE&
A''RUED RE!ENUE
1) (en Recei)ed: 2 balance sheet
accounts: Liability & Cash
2) (en Adjusted %Earned&* 1 Balance
Sheet Account Liability) & 1 !nco"e
State"ent Account #e$enue)
1) (en Adjusted + Earned* 1 inco"e
state"ent account #e$enue) & 1
balance sheet account asset)
2) (en Recei)ed: 2 Balance Sheet
Accounts: Cash & Accounts #ecei$able
or Accrued #e$enue
DE$ERRED E,-ENSE
%-RE-AID E,-ENSES OR ASSETS&
A''RUED E,-ENSES
1) (en -urcased: 2 Balance Sheet
Accounts at least 1 asset)
2) (en Adjusted + Used: 1 Balance
Sheet Account asset) and 1 !nco"e
State"ent Account %&pense)
1) (en Adjusted + Used: 1 !nco"e
State"ent Account %&pense) & 1
Balance Sheet Account Liability)
2) (en -aid: 2 Balance Sheet Accounts
'or deferrals( cash is paid or recei$ed in the
current period the cash flo)s first) and
you are adjusting ite"s that are already in
the financial records
'or accruals( cash is paid or recei$ed in a
subse*uent period because re$enues or
e&penses ha$e been earned or incurred but
not recorded or paid). +ou are adding ite"s
to the financial records that are not already
there
De"reciation* ,epreciation is an allocation "ethod- it is NOT a $aluation
"ethod. +ou are not trying to esti"ate the "ar.et $alue of your assets using
depreciation.
,r. Allison /oore
/arch 20( 2001