the adjustment process
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The Adjustment Process. 9.1 Exercises: page 308 #. The Adjusting Process. When preparing financial statements, the accountants must ensure: all accounts are brought up to date All late transactions are taken into account All calculations have been made correctly - PowerPoint PPT PresentationTRANSCRIPT
The Adjustment Process
9.1
Exercises: page 308 #
The Adjusting Process
When preparing financial statements, the accountants must ensure:
• all accounts are brought up to date
• All late transactions are taken into account
• All calculations have been made correctly
• All GAAP’s have been complied with
Adjusting Entries
This usually assigns amounts of revenue or expense to the appropriate accounting period before finalizing the books for the fiscal period.
Adjusting Entries for Supplies
The supplies account is allowed to become inexact between statement dates.
When supplies are purchased it is debited in the supplies account. As they are being use up it is not credited.
At the end of the accounting period this must be fixed
Adjusting Entries for Supplies
The Adjusting entry:
1st do an inventory (count the remaining supplies)
Example: supplies debit of 7900
actual supplies on hand 900
Adjusting entry20-2 DR CR
Dec 31 Supplies expense
7000
Supplies 7000
Adjusting Entries for Supplies
The new accounts will look as follows:
Supplies
20-3Dec 31 7900
___________ 900
7000
Supplies Expense
20-2Dec 31 0 7000 __________ 7000
Adjusting entries for prepaid expenses
We use this when business items are paid for in advance and the item is not all used up during the fiscal period.
A prepaid expense is an item paid for in advance, where the benefits extend into the future