1. Terminology and Concepts-Adjusting Entries: b. What are adjusting entries adj
ID: 2519355 • Letter: 1
Question
1. Terminology and Concepts-Adjusting Entries: b. What are adjusting entries adjusting? a. If utility expense accrues as incurred, why do we wait until we get the bill to record it? C. What is being deferred in a deferral adjusting entry? Provide a real life example for an expense deferral and a revenue deferral that you have personally encountered. d. What is being accrued in an accrual adjusting entry? Provide a real life example for an expense accrual and a revenue accrual that you have personally encountered. e. Which financial statements would be affected if revenue earned, but not yet received was not included in the books for the period? How would they be affected? Who f. Should a firm record in the accounting records interest expense incurred but not yet g. Should the firm record in the accounting records the use of supplies that have already would care if the entry were not made? paid? Why? been paid for (the supplies were included in the supplies account when they were acquired)? Why?Explanation / Answer
Requirement Terminology and concepts-Adjusting entries a We wait for bill to record it, eventhough it accrues as incurred, because we will not know the exact amount untill we receive the bill for the utilitis expenses. Generally, we pass the adjusting entry in the next month for current month once we receive the bill for previous month. We need to pass this adjusting entry for utilities expense as payment is not made eventhough it is incurred as we do not know the exact amount of utilities expense we have incurred. b The adjusting entries are those which are recorded eventhough no payment or receipt has taken place in cash. In short these are either accrued in this month but payment or receipt has not taken place or we have made advance payment or received revenue in advance which needs to be deferred and entry for the same has to be passed when it actually accrued. c Deferral adjusting entries are those entries which needs to be deferred even though payment or receipt in cash has already taken place. Examples of these deferral adjusting entries are as follows Expense deferral = Prepaid insurance Revenue deferral = Rent received in advance d Accrual adjusting entries are those which have incurred and accrued but the payment or receipt for the same has not yet taken place. Examples of these accrual adjusting entries are as follows Expense accrual = Accrued Utilities or Accrued Rent Revenue accrual = Outstanding rent to be received. As per Chegg Policy, we are supposed to answer maximum of four sub-parts of a question. we appreciate the rating of our answers. It really encourages us to improve our answers. Thank You.
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