Adjusting.Entry.Finals

• Adj entry of Assets:

  Debit: Depreciation Expense

  Credit: Accumulated Depreciation
• Assets that depreciates:

  • Building
  • Equipment
  • Supplies
  • Prepaid
• Accrual are the revenue or expenses that have been earned or incurred but have not yet recorded in the company's financial statements.

  
  

  Accrued are accumulated amount over a period of time (Interest)
• Both is 12-month period:

  • Fiscal year - Not necessarily being with calendar year.
  • Calendar year - Begin with Jan. 01.
• Revenues/Sales are considered only if a product is sold, service rendered, and cash is received.
• Accrued Income - Accounts Receivable; Earned but not yet collected (

  
  

  Accrued Expense - Incurred but not yet paid
• Recognized Prepaids/Assets > Credit: Accumulated Depreciation (Use/Consumption) > Debit: Depreciation Expense.
• Accounts receivable are invoices the business has issued to customers that have not been paid yet. Accrued revenue represents money the business has earned but has not yet invoiced to the customer.
• Deposits from customers are prepaid revenues because the business receives payment before providing any products or services. The deposit is credited to the accounts receivable account until it becomes collectible.
• Historical Cost Principle - Assets recorded at the actual cost at the time of acquisition, remains the cost on the book as long as owns by an entity.

  *No adjustments are made for changes in the market value of the asset. (Ex. Actual Cost: 2,100 in 1995, current market value: 127,000).