ACCRUAL VERSUS CASH BASIS OF ACCOUNTING
TYPES OF ADJUSTING ENTRIES
ADJUSTING ENTRIES FOR ACCRUALS
100
Transactions that change a company's financial statements are recorded in the periods in which the events occur, even if cash was not exchanged
What is Accrual Basis of Accounting?
100
Revenues for services performed but not yet received in cash or recorded
What are accrued revenues?
100
An adjusting entry for accrued revenues results in an increase to an asset account
What is a debit?
200
Is not in accordance with generally accepted accounting principles (GAAP).
What is Cash Basis of Accounting?
200
Expeses incurred but not yet paid in cash or recorded
What are accrued expenses?
200
An adjusting entry for accrued revenues results in an increase to a revenue account
What is a credit?
300
Although different accounting standards are often used by companies in other countries, it is central to all of these standards
What is the accrual basis of accounting?
300
Expenses paid in cash before they are consumed or used
What are prepaid expenses?
300
An adjusting entry for accrued expenses results in an increase to a liability account.
What is a credit?
400
Cash received before the service is performed
What are unearned revenues?
400
An adjusting entry for accrued expenses results in an increase to an expense account.
What is a debit?
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