Ch 4.3 Adjusting entries for accruals

Question 1

Why are accruals not recognizedd through accounts

Answer 1

becuase they are not even recroded in the journal entries!!! thi is because cash will be paid or recieved after THE END OF THE ACCOUNTING PERIOD FOR ACCRUALS

Question 2

Unlike prepayments, for which a journal entry has been recorded during the accounting period and is later adjusted, accruals are recorded only by adjusting journal entries

Answer 2

!!! PREPAID ARE ADJUSTED FROM PRE EXISTING ACCTS

ACCRUALS ARE RECORDED ONLY AFTER

Question 3

Until an accrual adjustment is made, the expense account (and the related liability account, which is usually a payable) or the revenue account (and the related asset account, which is usually a receivable) is understated. Adjusting entries for accruals will increase both a statement of financial position account and a statement of income account.

Answer 3

Until an accrual adjustment is made, the expense account (and the related liability account, which is usually a payable) or the revenue account (and the related asset account, which is usually a receivable) is understated. Adjusting entries for accruals will increase both a statement of financial position account and a statement of income account.

Question 4

Accrued Expenses

Answer 4

expenses that have been incurred but not yet paid

interest, salaries, income tax

normally recorded when paid, however if period ends b4 accrued expenses were paid, then only recorded in adjusted journal entry

Question 5

accrued expenses are also called

Answer 5

accrued payables or accrued liabilities

Question 6

Adjusted entry for accrued expenses

Answer 6

INCREASE to expense account (debit)

INCREASE to liabilty or payable account (Credit

Question 7

How to calclyate interest expense

Answer 7

1) TAKE PRINCIPAL AMOUNT
2) WHAT IS THE INTEREST % OVER? MONTHLY? YEARLY
3)PRINCIPAL AMOUNT * ANNUAL INTEREST RATE * TIME IN TERMS OF ONE YEAR = INTEREST EXPENSE

Question 8

When preparing interest adjustments be careful to pay attention to the dates. It is important to consider whether you are accruing interest for a month,quarter, or year. You also need to know the date you are accruing the interestto and the date the last interest accrual or payment was made.

Answer 8

When preparing interest adjustments be careful to pay attention to the dates. It is important to consider whether you are accruing interest for a month,quarter, or year. You also need to know the date you are accruing the interestto and the date the last interest accrual or payment was made.

Question 9

When is accrued itersest paid?

Answer 9

when the loan is due!

Question 10

IMPORTANT! WHAT DO YOU NEED TO DO WHEN ADJUSTING JOURNAL ENTRIES FOR INTEREST ACCRUED EXPENSE

Answer 10

Put accrued interest expense in interest payable account SEPARATE FROM BANK LOAN PAYABLE ACCT

INTEREST PAYABLE DR
BANK LOAN PAYABLE DR
CASH CR

Question 11

!!!!!!!!!!!!!!!!Be careful when accruing salaries to pay attention to the dates. It is important to know the date of the last payday. You also need to know the date you are accruing the salaries to, the number of employees, and their salaries (either daily or weekly).

Answer 11

Be careful when accruing salaries to pay attention to the dates. It is important to know the date of the last payday. You also need to know the date you are accruing the salaries to, the number of employees, and their salaries (either daily or weekly).

Question 12

Accrued revenues

Answer 12

revenues that have been earned but not recorded at the end of an accounting period.

Question 13

Do Adjusted entries ever involve cash accounts

Answer 13

never