Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

Adjusting journal entries are prepared:

at the beginning of the accounting period to set opening balances

only when errors are discovered in the accounting records

whenever a cash transaction occurs during the period

at the end of an accounting period to update account balances before preparing financial statements

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Verified step by step guidance

Understand the purpose of adjusting journal entries: They are made to ensure that the financial statements reflect the true financial position and performance of the company by updating account balances.

Recognize the timing of adjusting journal entries: These entries are prepared at the end of the accounting period, not at the beginning or during the period, to align the accounts with the accrual basis of accounting.

Identify the types of adjustments typically required: These include adjustments for accrued revenues, accrued expenses, prepaid expenses, unearned revenues, and depreciation.

Learn the impact of adjusting entries: Adjusting entries affect both the income statement and the balance sheet by ensuring that revenues and expenses are recorded in the period they are incurred, and assets and liabilities are properly stated.

Understand the role of adjusting entries in financial statement preparation: Adjusting entries are essential for preparing accurate financial statements, as they ensure that all accounts are up-to-date before the statements are finalized.