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adjustments in booking transactions (multi-period items (cash before…
adjustments in booking transactions
multi-period items
(cash before rev/exp recognition)
prepaid
we prepaid:
ARTIFICIAL ASSET
prepaid expense
time to recognize as an expense
ADJUST the booking of the transaction
they prepaid:
ARTIFICAL LIABILITY
unearned revenue
time to recognize as a revenue
DEPRICIATION
decrease in value of an asset due to usage
accumulated depreciation
contra
account of the fixed asset in question, its' DR/CR rules are opposite of its' main account, it increases over the year and its' accumulated value is deducted from the value of assets on the balance sheet
allocation of the cost (
appropriate portion
) of the asset to periods in which the asset is used
depreciation expense
shows on an income statement and gradually builds up the accumulated depreciation
accured items
(cash after rev/exp recognition)
accurals
: representation of recognized rev/exp before invoice/chash flow, in form of adjusted entry
ACCURED REVENUES
we made a revenue: delievered a good/sefvice before it was paid
A/R increase ( we're expecting payment for the good/service)
Sales rev increses
ACCURED EXPENSES
we owe someone a payment
A/P increase
expenses increase
ACCURED INTEREST (expense as well)
even tho the interes payment isn't due yet, we record it for the time period given
interest expenses increse
the due date for interest payment comes
cash decreases (bcs we finally paiddd)
a payable decreases(bcs we finally paiiiddd)
the rest of the expenses increse ( we already booked a part of it, now the remaining portion
these two added, should give the same number as cash decrease
interest payable increses (bcs we're not paying it yet,only when it's due)