FIRST SEM, FIRST QUARTER – UNIT ASSESSMENT

REVIEWER FOR FUNDAMENTALS OF ABM 2

ADJUSTING ENTRIES - result of past events
- future economic benefits are expected to
- entries made at the end of the accounting flow to the entity
period before closing procedures to update
balances of asset, liability, revenue and CURRENT ASSETS – expects to realize the
expense accounts to make their balances asset or intends to sell or consume it on its normal
ready for their preparation of financial operating cycle
position.
- primarily for the purpose of trading
- expects to realize the asset within twelve
KINDS OF ADJUSTING ENTRIES months after reporting period
- cash or cash equivalent unless the asset is
1.) Prepaid Expenses – starts as an asset, restricted from being exchanged or used to
ends as an expense settle liability for at least twelve months after
2.) Deferred Revenue – liability – revenue reporting period
3.) Accrued Revenue – earned revenue but no
payment example:
4.) Accrued Expense – expenses were
incurred but with no payment cash prepaid expenses
5.) Asset Depreciation – systematic way of accounts receivables office supplies
allocating the value of an asset decline
NONCURRENT ASSETS – all other assets
ADJUSTING ENTRIES ADHERE TO: that is not current
- completeness example:
- freedom from error
- timeliness land land improvements
- accrual basis of accounting machineries equipments
- revenue recognition
- matching principle ♥ LIABILITIES – present obligation of the
entity from past events
- settlement is expected to result in outflow
DEPRECIATION – decline in value of an asset from the entity of resources
due to wear and tear, obsolescence and
passage of time CURRENT LIABILITIES – expects
to settle the liability on its normal operating
RESIDUAL VALUE – the value expected in the cycle
asset after its useful life - holds liability primarily for the purpose of
trading
STRAIGHT LINE DEPRECIATION - due to be settled within twelve months after
the reporting period
asset cost – residual value / life in years - does not have an unconditional right to
defer settlement for at least 12 months after
= annual depreciation
the reporting perios

example
STATEMENT OF FINANCIAL POSITION trade accounts payable short term payable
salaries payable income tax
FINANCIAL STATEMENTS – structured payable
representation of the financial position and
financial performance of an entity NONCURRENT LIABILITIES – all
liabilities that is not current
- the objective of financial statements is to
provide information about the financial example
position, financial performance and cash bonds payable
flow of an entity long-term notes payable
- useful to a wide range of users in making
sound decision EQUITY – residual interest in the assets of
the entity after deducting all its liabilities
Financial statements provide info about
entity’s:

a. assets ASSETS = LIABILITIES

b. liabilities +
c. equity CAPITAL
d. income and expenses
e. contributions by and to owners in their CURRENT CURRENT LIABILITIES
company as owners ASSETS NONCURENT LIABILITIES
f. cash flows = +
NONCURRENT EQUITY
BALANCE SHEET ELEMENTS ASSETS

♥ ASSETS – resource
- result of past events
PSALM TALA
12- ABM WEDGWOOD
SCC – SHS 2021-2022