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

Which of the following is a good starting point for determining which accounts require adjustment at the end of an accounting period?

Analyzing only the cash account for discrepancies

Comparing the income statement to the balance sheet

Reviewing the trial balance for accounts that may not reflect current period activity

Posting all transactions directly to the financial statements

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Verified step by step guidance

Understand the purpose of adjustments: Adjustments are made at the end of an accounting period to ensure that all accounts reflect the current period's activity and comply with the accrual basis of accounting.

Review the trial balance: The trial balance is a summary of all ledger accounts and their balances. It is a good starting point because it helps identify accounts that may need adjustments, such as accrued expenses, prepaid expenses, or unearned revenue.

Identify accounts that may not reflect current activity: Look for accounts that are likely to require adjustments, such as accounts related to revenues earned but not yet recorded, expenses incurred but not yet paid, or depreciation of assets.

Avoid focusing solely on the cash account: While the cash account is important, adjustments often involve non-cash accounts, such as accounts receivable, accounts payable, and accrued liabilities, which are not reflected in the cash account.

Ensure adjustments align with financial statement preparation: Adjustments should be made to ensure the accuracy of both the income statement and the balance sheet, reflecting the true financial position and performance of the business.