Adjusting Journal Entries: Example. FAR CPA Exam. скачать в хорошем качестве

Adjusting Journal Entries: Example. FAR CPA Exam.

In this video, we cover adjusting entries using examples. Start your free trial: ✅https://farhatlectures.com/ 0:00 Introduction This video by Farhat Lectures explains adjusting journal entries, a core accounting concept. Here's a quick rundown: Prepaid Insurance (1:09): The video explains how to adjust an insurance expense when the company debited insurance expense instead of prepaid insurance. Depreciation Expense (5:42): This section shows the straightforward process of debiting depreciation expense and crediting accumulated depreciation. Accrued Salaries (6:16): The video explains how to record accrued salaries, increasing both an expense and a liability. Accrued Interest Payable (7:23): The video goes over accruing interest on a loan, debiting interest expense and crediting interest payable. Deferred Rent Revenue (8:47): This section covers a scenario where the company needs to adjust the unearned rent revenue. Correcting Rent Revenue Entry (10:36): Here, the video explains how to correct an entry where rent revenue was incorrectly credited, requiring a reduction in rent revenue and the creation of a deferred revenue. Adjusting Journal Entries: Enhancing Financial Statement Accuracy Adjusting journal entries are essential in accounting to ensure that the financial statements at the end of an accounting period accurately reflect the true financial status of the organization. These entries are made at the end of an accounting period to adjust income and expense accounts so that they comply with the accrual concept of accounting. 1. Purpose of Adjusting Entries Adjusting entries are necessary to: Ensure Accurate Reporting: Update the accounts to reflect the true revenues earned and expenses incurred during the period. Comply with the Accrual Principle: Recognize revenues when earned and expenses when incurred, not necessarily when cash is received or paid. Align with Matching Principle: Expenses should be matched with the revenues they help to generate in the same period. 2. Types of Adjusting Journal Entries Adjusting entries typically fall into one of the following categories: Accrued Revenues: Revenues for services or products delivered but not yet recorded by the end of the accounting period. Accrued Expenses: Expenses that have been incurred but not yet recorded. Deferred Revenues: Money received in advance for services or products to be delivered in the future. Deferred Expenses: Expenses that have been paid in advance but which relate to a future period. Depreciation: Allocating the cost of a tangible or fixed asset over its useful life. Amortization: Similar to depreciation but relates to intangible assets. 3. Examples of Adjusting Journal Entries Example 1: Accrued Expenses A company owes its employees $5,000 in wages at the end of February, payable in March. Journal Entry: Debit: Salaries Expense $5,000 Credit: Salaries Payable $5,000 Example 2: Accrued Revenues A law firm performed $3,000 worth of legal services at the end of the month that haven't been billed to clients yet. Journal Entry: Debit: Accounts Receivable $3,000 Credit: Service Revenue $3,000 #accountingstudents #accountingmajor #accountingexam