Ch. 3 Notes – The Adjusting ProcessAccounting Period ConceptAccrual AccountingUnder accrual basis of accounting, some accounts need updating at the end of the accountingperiod for some of the following reasons:1.2.3.Revenue RecognitionMatching concept or principleCash basis of accountingAdjusting entriesAccounts requiring adjustments1.Prepaid expensesa.Transaction:Cash is paid in advance for an expensei.Original Journal entry and accounting equation impactii.Adjusting Journal entry to update prepaid expenses at the end of the period
2.Unearned Revenuesa.Transaction:Cash is received for unearned revenuei.Original Journal entry and accounting equation impact
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Generally Accepted Accounting Principles,adjusting journal entry,Original Journal,ii. Adjusting Journal