ACCT2101 Final: ACCT2101 - Semester 1 Notes
Document Summary
2 types of adjusting entries: deferrals (prepayments): to recognise revenue or expense after cash inflow or outflow, prepaid expenses are initially they"re recorded as assets; the adjustment is showing how much of that asset has been used up at end of accounting period. (debit expense, credit proportion of prepaid asset used up, unearned revenue is initially recorded as a liability; the adjustment is showing how much of the revenue is earned. (debit unearned revenue, credit sales revenue , accruals (unrecorded transactions): to recognise revenue or expense before cash inflow or outflow. Contra accounts: negative a related account, property, plant and equipment accumulated depreciation, accounts receivable allowance for doubtful debts, inventory allows for obsolescence, useful for, likely ages of assets anf future outflows for new asset purchases, level of doubtful debts, collections policies and problems, levels of slow moving, out of date stock, efficiency of stock management. Prudence: exercise care when dealing with uncertainties in the process of recognition and measurement.
