Acc_1A_Deferrals_and_Accruals

Acc_1A_Deferrals_and_Accruals - Accruals: The cash has not...

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Mission College Accounting 1A Betty Christopher Deferrals and Accruals What is the difference? Deferrals: The cash was paid or received earlier, and now we are making an adjusting entry to recognize the expense or revenue. We deferred or postponed the expense or revenue until after the cash happened. 1 st Cash Entry 2 nd Adjusting Entry (To pay or receive cash in advance) (To recognize expense or revenue) Prepaid (prepaid rent) Expense (rent expense) Cash Prepaid (prepaid rent) Cash Unearned revenue Unearned Revenue Revenue Equipment Depreciation expense Cash Accumulated depreciation
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Unformatted text preview: Accruals: The cash has not yet been paid or received, but now we are making an adjusting entry to recognize the expense or revenue that has accrued . We accrue the expense or revenue; the cash will be paid or received later. 1 st Adjusting Entry 2 nd Cash Entry (To recognize expense or revenue) (To pay or receive cash later) Expense (salary expense) Payable (salary payable) Payable (salary payable) Cash Receivable (interest receivable) Cash Revenue (interest revenue) Receivable (interest rec.)...
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