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

Summary of Adjusting Entries

Financial Accounting

3. Accrual Accounting Concepts

Summary of Adjusting Entries

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Multiple Choice

Which of the following events would NOT require an end-of-year adjusting entry?

Recognition of unearned revenue that has now been earned

Depreciation of equipment used during the year

Payment of a utility bill received and recorded during the year

Accrued interest on a loan that has not yet been paid

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Verified step by step guidance

Step 1: Understand the purpose of adjusting entries. Adjusting entries are made at the end of the accounting period to ensure that revenues and expenses are recognized in the period they are incurred, following the accrual basis of accounting.

Step 2: Analyze each event to determine if it requires an adjusting entry. Adjusting entries are typically required for events that involve accrued revenues, accrued expenses, prepaid expenses, unearned revenues, or depreciation.

Step 3: Evaluate the first event: Recognition of unearned revenue that has now been earned. This requires an adjusting entry because unearned revenue is initially recorded as a liability and must be adjusted to recognize the revenue earned during the period.

Step 4: Evaluate the second event: Depreciation of equipment used during the year. This requires an adjusting entry because depreciation allocates the cost of the equipment over its useful life, ensuring expenses are matched with revenues in the correct period.

Step 5: Evaluate the third event: Payment of a utility bill received and recorded during the year. This does NOT require an adjusting entry because the utility expense has already been recorded when the bill was received, and the payment simply reduces the liability. Adjusting entries are not needed for transactions that have already been fully recorded during the year.