Accountin

g
Cycle
Adjustments
• Journal entries made to make the
Unadjusted balance into Adjusted Trial
Balance
• Done at the end of reporting period
• Done to record transactions that already
happened but is unrecorded as of the
year end
• Done to delay the recognition of items
that needs to be recognized in the future
period

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 Adjustments
Reclassifying Entries Correcting Entries
- Entries use to correct - Entries use to correct
errors in the account titles errors aside from wrong
account title

Adjusting Entries
- Use to record economic
events that already
happened but is not yet
recorded

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 Accrual Deferral
Adjusting Adjusting
Entries Entries
-adjusting entries made to -adjusting entries made to
update the books with delay the recognition of an
transactions that already item that will be used or
happened but is rendered in the future
unrecorded as of the year
end

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Accrual Adjusting Entries
Interest Expense Interest Income
PxRxT PxRxT
P = Principal P = Principal
R= Rate R= Rate
T= Time T= Time
Interest Expense xx Interest Receivable xx
Interest Payable xx Interest Income xx

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Accrual Adjusting Entries
Accrued Salaries Doubtful Accounts
Salaries Expense xx Doubtful accounts expense xx
Salaries Payable xx Allowance for doubtful accounts xx

Note!
Adjusting Entries should always involve one nominal
and one real account

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 Adjusting Entries For
Deferral

Pre-Payments Pre-Collections
-use Asset method or -use Liability method or
Expense method Income method
-if the problem is silent, - If the problem is silent,
use the asset method use the liability method

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 Pre -Payments

Asset Method Expense Method

Date of Transaction Date of Transaction
Prepaid Expense xx Expense xx
Cash xx Cash xx

At year end At year end

Expense xx Prepaid Expense xx
Prepaid Expense xx Expense xx

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 Pre -Collection
Liability Method Income Method
Date of Transaction Date of Transaction
Cash xx Cash xx
Unearned Revenue xx Revenue xx

At year end At year end

Unearned Revenue xx Revenue xx
Revenue Unearned Revenue xx
xx

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THAN
KS!
Any questions?

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