Five (5) Types of Adjusting Entries

• accrued revenue adjustment must be made when revenue is generated in one accounting period but is not recognized later.
• Accrued expense adjustments account for expenses you generated in one period but paid for later. One of the primary expenses that must be adjusted at the end of the month is payroll or paycheck. Any hours worked during the month that has not yet been paid should be included in expenses. The following is how the journal entry will present it:
• Deferred revenue is when a client pays you in advance. You must ensure that the revenue is recorded in the month you perform the service and incur the prepaid expenses, even though you are currently paid in advance.
• Deferred revenue is very similar to how prepaid expenses work. In this instance, you make a one-time advance payment and record the expense for the applicable period.
• ⦁ Depreciation expenses

  A single payment is made for an asset when it is depreciated, but the cost is spread out over multiple accounting periods. Most of the time, this is done with big purchases like buildings, vehicles, or equipment.

  The total accumulated depreciation amount on the balance sheet changes at the end of an accounting period when an asset is depreciated. Additionally, depreciation is reflected as an expense on the income statement at each payment.
• 1. Debits:

  • Represent increases in asset accounts or expenses.
  • Decrease liability accounts.
  • Examples of debit transactions include:
  • Purchasing inventory (increases assets).
  • Paying utility bills (decreases assets or increases expenses).
• 1. Credits:

  • Represent increases in liability accounts or revenue.
  • Decrease asset accounts.
  • Examples of credit transactions include:
  • Borrowing money (increases liabilities).
  • Sales revenue (increases revenue).