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

Adjusting Entries: Accrued Expenses

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

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Multiple Choice

The adjusting entry for accrued expenses includes a:

debit to a revenue account and a credit to an asset account

debit to a liability account and a credit to an expense account

debit to an expense account and a credit to a liability account

debit to an asset account and a credit to a revenue account

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Verified step by step guidance

Understand the concept of accrued expenses: Accrued expenses are expenses that have been incurred but not yet paid or recorded in the accounts. These require an adjusting entry at the end of the accounting period to ensure the financial statements reflect the correct expense and liability.

Identify the accounts involved: For accrued expenses, the accounts affected are an expense account (to recognize the incurred expense) and a liability account (to record the obligation to pay).

Determine the nature of the adjusting entry: Since expenses increase with a debit and liabilities increase with a credit, the adjusting entry will involve debiting the expense account and crediting the liability account.

Write the journal entry: The adjusting entry for accrued expenses will look like this: Debit the specific expense account (e.g., Salaries Expense, Interest Expense) and Credit the specific liability account (e.g., Salaries Payable, Interest Payable).

Review the impact on financial statements: The debit to the expense account increases expenses on the income statement, reducing net income. The credit to the liability account increases liabilities on the balance sheet, reflecting the obligation to pay in the future.