ASSIGNMENT NO.

07
SUMITTED TO: MA’AM ZAIB MAROOF
SUBMITTED BY: ABDULLAH ANEES (002)
TOPIC: COMPARISON BETWEEN ADJUSTING ENTRIES
DATE: 2ND MAY, 2020

Types of Adjusting entries:

There are 4 types of adjusting entries which are as follows:
1. Converting an asset to expenses.
2. Converting liabilities to revenue.
3. Accruing unpaid expenses.
4. Accruing uncollected revenue.

Comparison between adjusting entries

CONVERTING AN CONVERTING ACCRUING UNPAID ACCRUING

ASSET TO EXPENSES LIABILITIES TO EXPENSES UNCOLLECTED
REVENUE REVENUE

In adjusting entry of In accrual-based Accruing unpaid Accruing Uncollected

converting an asset to
expense organization do
that they convert a part of
an asset to an expense as
that part of asset is
utilized or consumed by
the organization.
accounting system the expenses means the revenue means that the
other adjusting entry is expenses incurred in organization have
for converting a liability current accounting period provided the services or
to revenue. In this but complete payment or goods but the revenue
situation company partial payment have not against those services or
received payments in been paid in current goods have not yet been
advance for earning accounting period but it earned.
revenue and made them will be aid in next
organization liability as accounting period we
unearned revenue made the transaction for
because the services or this purpose is.
goods not yet to be
provided in this case we
also made two entries 1st
entry is made when we
receive the payments for
earning revenue and
against it made the
liability of unearned
revenue and the other one
 entry is made at the time
when part of this liability
or whole liability is
expired these entries.

For example, For example, For example, For example,

We have Purchased Organization have Organization workers Organization have

insurance Police for 1 received 24000$ on 1 earned salary 5000$ on earned 500$ interest
year for $ 12,000/- as on Jan 2018 for providing 31 Dec 2018 but but about of interest
Jan 2018. services during the year organization have not have not been collected
of 2018. been yet paid. until 31-12-2018.
(Dr.) Unexpired
Insurance Account (Dr.) Cash Account 31-12-2018 (Dr.) Interest Receivable
12,000 24000 Account 500
(Dr.) Salaries Expense
(Cr.) Cash Account (Cr.) Unearned service Account 5,000 (Cr.) Interest Account
12,000 revenue Account 500
24000 (Cr.) Salaries Payable
At the period ending of 5,000
Jan 2018 the At the period ending of
organization will pass Jan 2018 the
the entry as follow: organization will pass
the entry as follow:
(12,000/12=1,000)
(Dr.) Insurance Expense (Dr.) Unearned service
Account 1,000 revenue Account
2000
(Cr.) Unexpired
Insurance Account (Cr.) Service revenue
1,000 earned Account
2000