Quick Look at Adjusting Entries

Adjusting EntriesA Puzzling Concept

Content by Dr. Kathleen Irwin; Media by PresenterMedia

• To begin unlocking this puzzle, let us introduce the two types of adjustments you might have to make at the end of the business cycle or period.

• Deferrals: when you prepay for something, or if you accept payment for services or merchandise prior to earning it.

• Accruals: revenues earned or expenses paid that need to be put on the books before closing.

What are Adjusting Entries??Deferrals and Accruals

• Deferrals Include:• Prepaid Expenses: Example• Unearned Revenues: Example

• Accruals Include• Accrued Revenues: Example• Accrued Expenses: Example

Putting it together

For more on Adjusting Entries, be sure to go through all the material in your Lesson and watch the homework assignment Video provided under Lesson 4.