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

In the context of adjusting journal entries for prepaid expenses, developing a ______ helps to track your progress and ensure accurate financial reporting.

cash flow forecast

schedule of prepaid expense amortization

trial balance

bank reconciliation statement

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Verified step by step guidance

Understand the concept of prepaid expenses: Prepaid expenses are payments made in advance for goods or services that will be consumed or used in the future. These are recorded as assets initially and then expensed over time as the benefit is realized.

Recognize the purpose of adjusting journal entries: Adjusting entries are made at the end of an accounting period to ensure that revenues and expenses are recorded in the period they are incurred, adhering to the accrual basis of accounting.

Identify the correct tool for tracking prepaid expenses: A schedule of prepaid expense amortization is used to systematically allocate the prepaid expense over the periods it benefits. This schedule helps ensure accurate financial reporting and simplifies the adjustment process.

Understand how the schedule works: The schedule lists the prepaid expense amount, the period it covers, and the portion to be expensed in each period. This ensures that the expense is recognized proportionally over time.

Apply the schedule to adjusting entries: Use the schedule to determine the amount of prepaid expense to be expensed for the current period. Record the adjusting journal entry by debiting the appropriate expense account and crediting the prepaid expense account.