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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 ... – PowerPoint PPT presentation

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Title: The Adjustment Process


1
The Adjustment Process
  • 9.1
  • Exercises page 308

2
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 GAAPs have been complied with

3
Adjusting Entries
  • This usually assigns amounts of revenue or
    expense to the appropriate accounting period
    before finalizing the books for the fiscal period.

4
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

5
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 entry

20-2 DR CR
Dec 31 Supplies expense 7000
Supplies 7000
6
Adjusting Entries for Supplies
  • The new accounts will look as follows

Supplies Supplies
20-3 Dec 31 7900 ___________ 900 7000
Supplies Expense Supplies Expense
20-2 Dec 31 0 7000 __________ 7000
7
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
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