Assets and liabilities are also affected, provide information on liquidity-Judgment is necessary to make adjustment entries-Error can lead to distortions of the measures taken2.3.2 the adjustment processadjusting entries are used to apply incremental (don tich) makes up the transactions that span more than one accounting period.adjustable antries invole at least a balance account and at least one income statement accounts. adjustment item never invole the cash account. They are needed when cornered or deferals area of existence.Delayed, is the recognition of expenses already paid or received before revenue. The money has been recorded in a transaction before the money was paid or received. A delay is delayed:-A recording costs already paid. The cost was noted that must be distributed between two or more accounting period, or-The recognition of revenue received in advance. Revenues have not yet made was noted that must be distributed between two or more accounting period.Extract front is the recognition of revenues or costs already incurred but not yet recorded, because the money was not related to pay or receive. The money will be recorded in a transaction in the future when it is received or paid. A crowded area of the recognition of:-A revenue, have been collected but not yet recorded, or-A costs have been incurred, but not yet recorded for the money involved will be received or paid, respectively, over a period of time in the future.They are all assets that should be allocated to the cost are used from time to time; This means that they all require the items adjusted to the end of the accounting period.Allocation of costs recorded between two or more accounting period (a-f)The companies often do spend that benefit more than one time period. These costs usually are debited to the account properties. At the end of the period of accosting, the account that was used to be transferred from the account property for an expense account. Two of the more important types of adjustments are the upfront costs and the depreciation of plant and equipment.prepaid rental (adjusted)Jan 2: John Michel Advertising co. paid $ 4.000 advance rent for Jan and Feb, When every day for months, part of the assets, prepaid rent, expiration and becomes an expense account. Jan 31, half the amount prepaid lease has expired and must be considered a cost ofJanuary 31: prepaid subscription has expired for $ 2,000 a month to adjust your account by allocating $ 2000 of prepaid rent expenses.
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