cma_Accounting_information_system_

Adjusting entries they are made at the end of the

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Unformatted text preview: ion of finantial statement . ADJUSTING ENTRIES: They are made at the end of the accounting period in short adjustment are needed to ensure that the revenue recognition and matching principals are followed . – -: -0105030092 : 0502265272 e-mail:[email protected] : < =>? @ 8 A 35 8 9 : : ; -: 6 7 WWW.AHSCADA.COM 0124059666- 034851600- 034865655 : L ;M NO :L ;M Accounting Accounting House House 6 published on www.jps-dir.com www.jps- Adjusting entries are required every time financial statements are prepared . TYPES OF ADJUSTING ENTIES: Adjusting entries can be classified as either prepayments or accruals . Each of these clases has two sub-categories PREPAYMENTS 1- Prepaid expenses. expenses paid in cash and recorded as assets before they are used or consumed . 2- Unearned revenues : Revenues received in cash and recorded as liabilities before they are earned. ACCRUALS 3- Accrued revenues : Earned but not yet received in cash or recorded . 4- Accrued expenses: Expenses incurred but not yet paid in cash or recorded Adjusting entry for prepayments: Prepaid expenses expaire either with the passege of time eg.(rent and insurance) or through use and consumption eg. (supplies) Prepaid expense adjusting entry results in a debit to an expense account and credit to an asset account . UNEARNED REVENUES: The anjusting entry for unearned revenues results in a debit (decrease ) to a liability account and a credit increase to revenue account . ADJUSTEMENT OF ACCRUALS: An adjusting entry for accrued revenue results in a debit (increase)to an asset account and a credit (increase ) to a revenue account. the adjusting entry for accrued expenses results a debit (increase) to an expense account and a credit (increase) to a liability account CLOSING: It is the procedure generally followed to reduce the balance of nominal (temporary) accounts to Zero in order to prepare the accounts for the next period’s transactions – -: -0105030092 : 0502265272 e-mail:[email protected] : < =>? @ 8 A 35 8 9 : : ; -: 6 7 WWW.AHSCADA.COM 0124059666- 034851600- 034865655 : L ;M NO :L ;M Accounting Accounting House House 7 published on www.jps-dir.com www.jps- REVERSING ENTRIES: It is made at the beginning of the next accounting period and is the exact opposite of the related adjusting entry made in the previous period A work sheet is a columnar sheet of paper used to adjust the account balances and prepare the financial statements. Use of a work sheet helps the accountant prepare the financial statements on a more timely basis. It is not necessary to delay preparation of the financial statements until the adjusting and closing entries are journalized and posted. – -: -0105030092 : 0502265272 e-mail:[email protected] : < =>? @ 8 A 35 8 9 : : ; -: 6 7 WWW.AHSCADA.COM 0124059666- 034851600- 034865655 : L ;M NO :L ;M...
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