Adjusting%20EntryTree[1] - ADJUSTING ENTRIES DECISION TREE...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ADJUSTING ENTRIES “DECISION TREE” A “decision tree” gives the pathways for deciding what to do. This one helps to look at a situation and decide which type of adjusting entry you need to write. All adjusting entries involve either the accruing of an Expense or the accruing of a Revenue. Which is involved in any situation you happen to be considering? Well, ask yourself . . . Are we using resources, OR are we doing work for a customer ? THE EXPENSES PART A) If we’re using resources , then we’ll be accruing Expense . 1) If we paid for those resources in advance , then we’ll be a) using up a Prepaid Expense , an asset which really ought to be called Goods and Services Receivable from Suppliers Expense xxx Prepaid Expense xxx or b) gradually expensing a long-lived resource, which is called Depreciation Depreciation Expense xxx Accumulated Depreciation xxx or c) using up Supplies Supplies Expense xxx Supplies xxx 2) If we haven’t paid for the resource in advance, then we must be in the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Adjusting%20EntryTree[1] - ADJUSTING ENTRIES DECISION TREE...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online