FAR

• Adjustment


  Correction of record of a transaction which either has not been recorded
• Overstatement of profit


  Failure to adjust for accrued salaries at year end
• Supplier


  Need to be adjusted at year end
• Expenses with revenue


  Expense recognition principle matches
• Accrued Revenues


  Revenue earned not yet collected
• Prepaid Expenses


  Office supplies on hand that will be used in the next period
• Unearned Revenues


  Not yet recognized but collected in advance
• Contra Asset Account


  Accumulated depreciation
• Revenue recognition and matching


  Adjusting process is based on two accounting principles
• Debits depreciation expense


  Journal entry to record depreciation
• Expense Account and credit to an asset account


  Adjusting entry to allocate a previously recorded asset to expense involves debit
• Insurance Expenses


  Nominal account
• Adjusting Entries


  Entries made at the end of the accounting period to correct and update the record of business
• Accrued Expenses


  Outstanding expenses
• Accrued Expenses are recorded in balance sheet as liability
• Permanent Account


  Balance sheet account
• Advertising Expense


  Account that has a normal debit balance
• Classifying


  A function that general ledger serve in accounting process
• Compound journal account


  Journal entry that contains two or more accounts
• Income Statement


  First financial statement that is prepared from the trial balance
• Record the date


  First step in recording a transaction in a journal
• An expense


  Cost of doing business
• Narration


  Brief explanation of journal entry
• Capital Account does not contain asset ledger
• Equity


  Financial statement is defined as a residual amount
• Identifying


  Recognition or non recognition of economic activities
• Measuring


  Process of determining the monetary amounts at which elements