Scribd Logo
Upload

Welcome to Scribd!

  • Chapter 3 (Theoretical)

    Uploaded by

    Sabbir Hossain
    4 views7 pages
    This document discusses adjusting entries in accrual-basis accounting. It explains the differences between accrual-basis and cash-basis accounting, and the types of adjusting entries used - deferrals which include prepaid expenses and unearned revenue, and accruals which include accrued expenses and accrued revenue. Examples are given of adjusting entries for prepaid rent, unearned revenue, accrued rent expenses, and accrued rent revenue.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document discusses adjusting entries in accrual-basis accounting. It explains the differences between accrual-basis and cash-basis accounting, and the types of adjusting entries used - deferrals which include prepaid expenses and unearned revenue, and accruals which include accrued expenses and accrued revenue. Examples are given of adjusting entries for prepaid rent, unearned revenue, accrued rent expenses, and accrued rent revenue.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    4 views7 pages

    Chapter 3 (Theoretical)

    Uploaded by

    Sabbir Hossain
    This document discusses adjusting entries in accrual-basis accounting. It explains the differences between accrual-basis and cash-basis accounting, and the types of adjusting entries used - deferrals which include prepaid expenses and unearned revenue, and accruals which include accrued expenses and accrued revenue. Examples are given of adjusting entries for prepaid rent, unearned revenue, accrued rent expenses, and accrued rent revenue.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 7

    :: CHAPTER 3 ::

    ADJUSTING THE ACCOUNTS


    --- LAMIA ALAM
    TOPICS TO BE DISCUSSED

    ACCRUAL-BASIS VS. CASH- TYPES OF ADJUSTING


    BASIS ACCOUNTING ENTRIES
    ACCRUAL-BASIS ACCOUNTING

    Revenue is recognized when services are performed

    Expense is recognized when expenses are incurred.


    CASH-BASIS ACCOUNTING

    Revenue is recognized when cash is received.

    Expense is recognized when cash is paid.


    TYPES OF ADJUSTING ENTRIES

    Deferrals Accruals

    Prepaid Unearned Accrued Accrued


    Expense Revenue Expense Revenue
    Tenant Landlord
    Jan-1: Paid rent for 6 months in advance. Jan-1: Received rent for 6 months in advance.
    Prepaid Rent DR. Cash DR.
    Cash CR. Unearned Revenue CR.
    Jan-31: Unearned revenue has been earned for
    Jan-31: Prepaid Rent expired for the the month.
    month.
    Rent Expense DR. Unearned Revenue DR.
    Prepaid Rent CR. Service Revenue CR.

    Jan-31: Rent expenses incurred but not Jan-31: Rent services provided on account.
    paid. A/R DR.
    Rent Expense DR.
    Service Revenue CR.
    A/P CR.
    Feb 28: Received the cash from the
    Feb 28: Paid the creditor for balance tenant.
    owed. A/P DR. Cash DR.
    Cash CR. A/R CR.
    Thank You
    Stay In, Stay Safe!

    You might also like