Procopy Concepts financial accounting chapter 3 Save

Four types of adjusting entries

Unearned revenues, accrued revenues, prepaid expenses, accrued expenses

Unearned revenue

Previously recorded liability that was created when cash was received in advance of performing service (earning the revenue). Amounts must be adjusted for amount of revenue that has now been earned during the period. Debit: unearned revenues Credit: revenues

Accrued Revenues

Revenues that have been previously earned but have not yet been recorded Debit: accounts receivable credit: revenues

Prepaid expenses

Previously recorded assets that were paid for in advance but must be adjusted for the amount of expense that has been incurred during the period. Debit: supplies expense Credit: prepaid supplies

Accrued expenses

Expenses that have been incurred but have not been recorded or paid. Debit: Expense Credit: Accrued payable

Accruals

Recognition of revenue or an expense that has arisen but not yet been recorded. (accrued revenues, accrued expenses)

Deferrals

Recognizes revenues or expenses that were probably deferred that now need to be recognized.