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Chapter 3 Notes

h.co b .uob

h.c b-b

.c -bh b o .u

om

.com .com h h b b .uob Accounting Methods: .uob w w ww ww


h.c b-b om

Accrual Basis Accounting - revenues and expenses are recorded when revenue is earned or when expenses are incurred whether or not cash is received or paid.

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w.u ww

.com h b ob-

o w.u w w

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om

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.com .com .com .com h h h h b b b b ob-is either received or .uobCash Basis Accounting cash .uob - revenues and expenses .uobare not recorded until .u w w w w paid. ww ww ww ww
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w.u ww

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om

.com .com h h b b - Adjusting Entries: ob.uob w w.u ww ww

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w ACCOUNTING, 4E www.u ww
Chapter 3 Notes

h.co b .uob

h.c b-b

.c -bh b o .u

om

.com .com .com .com .com h h h h h b b b b b - assets that are paid b- in advance and then - includes miscellaneous ob.uob Deferred (Prepaid) .uExpenses .uob .uofor .uob w w w w w w expire or get used up in the near future. Debit an expense and credit the prepaid ww ww ww waccount ww
asset account. (Examples include Rent, Insurance, and Supplies)

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om Adjusting Journal h entry: .com b .uob w ? ww Expense


Prepaid Asset

w $xxx ww

.uo

h.c b-b

om

.uo w w the value w of the asset


that was used up

h.c b-b

om
w ww .uo

h.co b b

$xxx

w ww

.uo

.com h b b-

oa plant asset's cost to an o o Depreciation ofw Plant of is .uo Assets - the allocation w.u w.uexpense account as it w.u w w w w w a contra-asset account. w usedw over its useful life. Debitw an expense account and credit

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h.co b b

h.c b-b

om

h.c b-b

om

w ww

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ww

b obu . w

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h.c b-b om
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Adjusting . Journal uo Entry:

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w ww

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m
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Expense ? Payable m

$xxx

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h.c b-b

for the amount $xxx owed m

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w ACCOUNTING, 4E www.u ww
Chapter 3 Notes

h.co b .uob

h.c b-b

.c -bh b o .u

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.com .com .com .com .com h h h h h b b b b b b-o revenues that a businessu earned but has not yet payment for. uobobob.uob Accrued Revenues .u . has .ureceived w w w w w. w Debit an asset account account. ww ww ww and credit a revenuew ww
(Examples include Interest)

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h.c b-b

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Revenue

o w.u w $xxx w

h.c b-b

om
w.u ww o

h.c b-b

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w ww .uo

h.co b b

$xxx

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$xxx w.u ww $xxx

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.com .com .com .com .com h h h h h b b b b b - Adjusted Trial Balance - with their adjusted balances. These amounts obob-- a list of all ledger accounts .uob .u .uob .uob w w w w w.u are used in creating the financial statements. ww ww ww ww ww
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