Bookkeeping 15. Adjusting Entries Flashcards
- Before you can make FINANCIAL REPORTS for the accounting period, you will need to make:
ADJUSTMENTS in your TRIAL BALANCE figures to allow for situations that were not recorded in the day to day entries and postings.
- What is an example of an ADJUSTING ENTRY?
At the end of the accounting period, you take inventory of all office supplies to see the value of what you actually have on hand and adjust the balance accordingly.
- Another example of ADJUSTING ENTRIES using EQUIPMENT:
MACHINERY and BUILDINGS wear out (DEPRECIATE), and an ADJUSTMENT FOR DEPRECIATION must be made to the CAPITAL ASSET ACCOUNTS.
- Why is an ADJUSTING ENTRY made for SALARIES?
You may owe WAGES, SALARIES, or COMMISSIONS that have not yet shown on the EXPENSE ACCOUNT because THEY HAVE NOT YET BEEN PAID.
- What about ADJUSTING ENTRIES for ACCOUNTS RECEIVABLE?
The books may need to recognize that some ACCOUNTS RECEIVABLE will never be collected.
- How does the ADJUSTING ENTRY process start?
ADJUSTMENTS are NOT usually supported by paper documentation, SO YOU HAVE TO TAKE THE INITIATIVE and request the information from others, take inventories, or consult records from prior years to see what kind of adjustments are needed.
- In order to simplify making the adjustments and checking them for accuracy, you:
prepare a WORKSHEET
- Who is the WORKSHEET presented to?
It is not a formal report and it is not presented to anyone, it is done to reduce the likelihood of errors in the final reports, and to aid in preparing them.
- How many columns does the WORKSHEET generally have?
TEN, consisting of a Dr and a Cr for each of FIVE CATEGORIES.
- What are the FIVE CATEGORIES in the WORKSHEET?
- Unadjusted Trial Balance
- Adjustments
- Adjusted Trial Balance
- Income (Operating) Statement
- Balance Sheet
