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Hello, Class Please complete this assignment following below instructions; you need also, to participate in the pertinent discussion board forum (I have created a forum for the discussion of the assignment). Assignment information: Hello, Class! Please keep on mind that as accountant, we need to present stakeholders, accurate reports of the financial or business or economic events occurred in a specific period of time. As we have covered in previous in PowerPoints and sources, a the end of the accounting period, most ot the accounts balances in the ledger, will be transferred to the financial statements. For example, the total in cash accounts. However, some transactions force us make “adjustments” in their accounts balances. Within the accrual accounting practice we need to represent some of those transactions using accruals and deferrals. Such as, account receivables (accrual revenues), account payables (accrual expenses), unearned revenues (deferred revenues), and prepaid expenses (deferred expenses). Please explain why we need to realize “adjusting entries”, from the perspective of the “adjusting process”. Instructions: 1. Prepare a brief essay of (minimum two paragraph).Remember as per APA a paragraph must contain no less than three sentences. Use a Word document and save as WK#5_Last name First name Initial_Assignment 2. Also, send a copy of your assignment to my email: ccalcador@fnu.edu 3. Reply to at least one of your classmate 4. Submit no late than next Monday, October 1, 2017 before 12:00 pm Thank you
Expert Answer
Answer:
A Statement called “Trial Balance” mostly contains the raw accounting data before even ensuring that all revenues & expenses are properly reconciled. As an accountant, he/she should apply the Time period concept, the Revenue Recognition Accounting Principle, and then he/she realizes that some adjustments are required to be made to the raw trial balance. Revenues & Expenses are not “up-to-date” at the end of the accounting period and adjustments are needed. Adjusting entries are only made at the end of the accounting period.
Each Adjusting Journal Entry will adjust a balance sheet & an Income Statement Account. It never affects cash. The Adjusting Journal Entries are divided into two basic categories: (a). Prepaid (Deferrals) (b). Accruals. Prepaid includes Prepaid Expenses & Unearned Revenues. Accruals includes Accrued Revenues& Accrued Expenses.
Adjusting Entries are needed for the following reasons:-
- Some events are not journalized daily because it is not possible to do so. Examples such as the consumption of supplies & the earning of wages by employees.
- Some costs are not journalized during the accounting period because, they expire with the timing difference rather than to reconcile every day transactions. Examples such as Equipment deterioration, rent & insurance expiring.
- Some items may be unrecorded. Such as a utility bill that will not be received or paid until the next accounting period.
