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The Adjustment Process

The Adjustment Process . 9.1 Exercises: page 308 #. The Adjusting Process. When preparing financial statements, the accountants must ensure: all accounts are brought up to date All late transactions are taken into account All calculations have been made correctly

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The Adjustment Process

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  1. The Adjustment Process • 9.1 • Exercises: page 308 #

  2. The Adjusting Process When preparing financial statements, the accountants must ensure: • all accounts are brought up to date • All late transactions are taken into account • All calculations have been made correctly • All GAAP’s have been complied with

  3. Adjusting Entries • This usually assigns amounts of revenue or expense to the appropriate accounting period before finalizing the books for the fiscal period.

  4. Adjusting Entries for Supplies • The supplies account is allowed to become inexact between statement dates. • When supplies are purchased it is debited in the supplies account. As they are being use up it is not credited. • At the end of the accounting period this must be fixed

  5. Adjusting Entries for Supplies • The Adjusting entry: • 1st do an inventory (count the remaining supplies) Example: supplies debit of 7900 actual supplies on hand 900 Adjusting entry

  6. Adjusting Entries for Supplies • The new accounts will look as follows:

  7. Adjusting entries for prepaid expenses • We use this when business items are paid for in advance and the item is not all used up during the fiscal period. • A prepaid expense is an item paid for in advance, where the benefits extend into the future

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