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  #1  
14th March 2016, 07:42 AM
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Adjusting Entries MBA

Hey buddy I’m looking for the details about Adjusting Entries which come under Master Of Business Administration program?
  #2  
14th March 2016, 07:43 AM
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Join Date: May 2012
Re: Adjusting Entries MBA

I will get the information about Adjusting Entries which come under Master Of Business Administration program so that you can check them easily.

Here I’m telling you about the Enteries
The Adjusting entries are journal entries made at the end of the accounting period to allocate revenue and expenses to the period in which they actually are applicable.

Adjusting entries are required because normal journal entries are based on actual transactions, and the date on which these transactions occur may not be the date required to fulfill the matching principle of accrual accounting.

There are two types of Entries


Accruals: for revenues and expenses that are matched to dates before the transaction has been recorded.

Deferrals: for revenues and expenses that are matched to dates after the transaction has been recorded.

Accruals
Accrued items are those for which the firm has been realizing revenue or expense without yet observing an actual transaction that would result in a journal entry.

Example

Date Account Titles & Explanation Debit Credit
9/30 Salary expense 80,000
Salaries payable 80,000
Salaries accrued in September,
to be paid on Oct 1.

Some accrued items for which adjusting entries may be made include:

Salaries

Past-due expenses

Income tax expense

Interest income

Unbilled revenue


Deferrals
Deferred items are those for which the firm has recorded the transaction as a journal entry, but has not yet realized the revenue or expense associated with that journal entry.

Example
Date Account Titles & Explanation Debit Credit
9/1 Prepaid Expenses 12,000
Cash 12,000
12-month prepaid insurance policy.

Some deferred items for which adjusting entries would be made include:

Prepaid insurance

Prepaid rent

Office supplies

Depreciation

Unearned revenue


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