Lecture 03 - Reporting Process B

Question 1

⭐️Four Types of Adjustments

Answer 1

Deferred - involve cash being paid or received before the related expense or revenue is recognized.

• A company receives payment for a service or product it will provide in the future.
• A company pays in advance for a good or service it will consume in the future.

Accrued - involve recognizing revenue or expenses before cash is received or paid.

• Revenue is earned but the payment has not yet been received.
• An expense is incurred but payment has not yet been made.

Question 2

⭐️ Preparing Financial Statements (4)

Answer 2

Question 3

Closing Process: Retained earnings

Answer 3

Retained earnings is a permanent account reported on the balance sheet.

Question 4

Contra Accounts

• Example
• Impact

Answer 4

• Used to provide additional information, such as Accumulated Depreciation,
  a contra asset in the balance sheet, which helps estimate asset age.
• An increase in the contra asset account, such as accumulated depreciation, reduces the book value of the asset.

Question 4

How is the order of accounts for an unadjusted trial balance typically organized? (5)

Answer 4

By listing the accounts (account: debit ; credit) in specific sequence or structure.

1. Asset
2. Liability
3. Equity
4. Revenue
5. Expence