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Unformatted text preview: Types of adjusting entries: Deferralsmeans to put it off-prepaid expense-unearned revenues Accrualsmeans to build it up-accrued revenues-accrued expenses *WHEN ADJUSTING JOURNAL ENTRIES, NEVER USE THE CASH ACCOUNT!!!!!! Deferrals are either a prepaid expense or unearned revenue Cash payment before expense recorded prepayments often occur in regard to:-insurance-supplies-advertising-rent-equipment-buildings Prepaid expenses:-costs that expire either with a passage of time or through use CLICKER: Tiger Co. purchased a 1-year insurance policy on November 1 st for $12,000. Assuming no other adjusting entries are made before December 31 st , what is proper adjusting entry on December 31 st ? Insurance Expense$2,000 Prepaid Insurance$2,000 Depreciation- allocation of cost over time...
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