Académique Documents
Professionnel Documents
Culture Documents
3 Types of Account:
1. Real (Permanent) Accounts accounts in the SFP (A = L+Oe); regardless of the period in cycle; it will always (the
balance) be there in nature.
2. Nominal (Temporary) Accounts Accounts in the I/S; balances that are not always/usually incurred in nature.
We dont accumulate the balance.
3. Mixed Accounts = (Nominal + Real) Accounts both from the SFP and I/S.
e.g. : Prepaid Expense (payee); Unearned income (receiver)
- Entries made at every accounting period to avoid the overstatement or understatement of accounts.
1. Accrued Expenses 5. Depreciation
2. Accrued Income 6. Doubtful Accounts
3. Prepaid Expenses 7. Merchandise Inventory
4. Unearned Income
Prepaid Expenses
- Expenses paid for, but not yet incurred.
Adjusting Entries
Asset Method Expense Method
Cash XX Cash XX
Unearned Service Income XX Service Income XX
Adjusting Entries
Liability Method Income Method
Depreciation
- Decrease in economic value of the fixed asset.
Depreciation
Cost
__(Scrap Value)__
Depreciable Amount
Depreciation Value x Fractional Year (Eg. 9/12)
Estimated Useful Life
Depreciation Value
Adjusting Entries
Depreciation XX
Accumulated Depreciation XX
Doubtful Accounts
-Bad debts / uncollectible accounts
1. Increased by __%
Allowance
Beginning Accounts Receivable, End
X = (Adjusting Entries) X %
End Bad Debts Expense
2. Increased to __%
Allowance
Accounts Receivable, End
Beginning
X % Estimated Loss
Adjusting Entries
Allowance for Bad Debts, End
X = (End)
________(Beginning Balance)
Adjustment = Bad Debts, End
Adjusting Entries