Adjusting entriesneededtoensurethattherevenue

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Unformatted text preview: recorded in the period in which they are earned. Expenses ­ recognized in the period in which they are Expenses ­ recognized in the period in which they are incurred. Adjusting entries ­ needed to ensure that the revenue recognition and matching principles are followed. Chapter 3-11 LO 3 Explain the reasons for adjusting entries. Timing Issues Timing Issues Review Adjusting entries are made to ensure that: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which they are earned. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. all of the above. Chapter 3-12 LO 3 Explain the reasons for adjusting entries. Types of Adjusting Entries Types of Adjusting Entries Deferrals 1. Prepaid Expenses. Expenses paid in cash and recorded as assets before they are used or consumed. 2. Unearned Revenues. Cash received and recorded as liabilities before revenue is earned. Accruals 1. Accrued Revenues. Revenues earned but not yet received in cash or reco...
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This note was uploaded on 01/14/2012 for the course ACCOUNT 102 taught by Professor Adams during the Spring '11 term at Bradford School of Business.

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