5 Main Adjusting Entries

Question 1

Prepaid Expenses

Answer 1

You paid for something before using it
You decrease an asset and increase an expense.

Question 2

Accrued Expense

Answer 2

You owe money for something you have already used
You increase an expense and increase a payable (liability)

Question 3

Unearned Revenue

Answer 3

You got paid before you did the work
You decrease a liability and increase revenue

Question 4

Accrued Revenues

Answer 4

You did the work but haven’t been paid (or even billed yet)
You increase revenue and increase receivables (asset)

Question 5

Depreciation

Answer 5

You spread the cost of a long-term asset over time.
You increase an expense and increase accumulated depreciation (contra asset)