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Adjusting Journal Entries

Adjusting journal entries are used to update accounts prior to preparing financial statements for items that affect more than one accounting period. This ensures balance sheet and income statement items are not overstated or understated. Common accounts adjusted include prepayments, unearned revenue, accrued income, bad debts/doubtful accounts, and depreciation expense.

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Gerald Teaño
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77 views

Adjusting Journal Entries

Adjusting journal entries are used to update accounts prior to preparing financial statements for items that affect more than one accounting period. This ensures balance sheet and income statement items are not overstated or understated. Common accounts adjusted include prepayments, unearned revenue, accrued income, bad debts/doubtful accounts, and depreciation expense.

Uploaded by

Gerald Teaño
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ADJUSTING

JOURNAL
ENTRIES
Adjusting • Adjusting Journal Entries are
Journal entries used to update the
accounts prior to the preparation
Entries of Financial Statements
Reasons The accounts affect more than
one accounting period.
for
Adjusting The accounts affected are
Journal adjusted so there would be no
overstatement or
Entries understatement of balance sheet
items and income statement
items
Adjusting Journal Entries
• Prepayments
• Unearned Revenue
• Accrued Income
• Bad Debts/Doubtful Accounts
• Depreciation Expense
PREPAYMENTS
expenses already paid but not yet incurred or used.
Prepaid Rent
PREPAYMEN
TS
Prepaid Insurance

Supplies
UNEARNED OR
DEFERRED
INCOME
Income already received but not yet earned
ACCRUED EXPENSES

Expenses already incurred or used but not yet paid


ACCRUED
INCOME
Income already earned but not yet received
BAD DEBTS/
DOUBTFUL ACCOUNTS

Losses due to uncollected accounts


DEPRECIATION
EXPENSE
Allocation of plant asset cost over its useful life

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