Accounting Db2

Adjusting entries - A single transaction that may affect revenues or expenses in more than one accounting period. All transactions do not have to necessarily been recorded during the period. (Adjusting Entries, retrieved from www.cliffnotes.com) For example, I work as the retention NCO for my battalion and if I need office supplies I have a 2000 balance I can use when I need to get supplies. So $2,000 debit balance in its supplies account at the end of a month, so when I do my inventory I see that I only have $500 worth of supplies left. So I would deduct $500 from that $2000. Leaving me a balance of $1500 for supplies. Since supplies worth $500 have been used up, the supplies account requires a $1500 adjustment so my supplies are not over the limit, and the supplies expense account requires a $1500 adjustment so expenses are not under the limit.

Accrue revenues is necessary when revenues have been earned but not yet recorded. Examples of unrecorded revenues may involve interest revenue and completed services or delivered goods that, for any number of reasons, have not been billed to customers. For example I have an pest control service that comes out to my house and performs their job because I absolutely hate to see bugs or any type of animals in my yard and especially living in North Carolina, you can walk out your house and see gecko's lizards etc. So this company comes and performs their service and waits to bill me two weeks later. They do this because they want the customer to know that they stand behind their product and if you have any issues they will come back out for free no charge to the customer. On the other hand they hope to earn your business and if all goes well you pay 85 for initial fee and 75 quarterly. This is meant by accrued revenue. Another way companies calculate this is by using Principal (x) annual interest rate (x) time period in years. I am unsure how this would work on a quarter basis with the interest by I will assume that it is still based off how may days are in that quarter which will result in a 10 to 15 interest rate.

Accrue expenses is necessary when there are unrecorded expenses and liabilities that apply to a given accounting period. These expenses may include wages for work performed in the current accounting period but not paid until the following accounting period and also the accumulation of interest on notes payable and other debts. Lawn Mower Company owes its employees $2,000 in unpaid wages at the end of an accounting period. The company makes an adjusting entry to accrue the expense by increasing (debiting) wages expense for $2,000 and by increasing (crediting) wages payable for $2,000.Unearned revenues are payments for future services to be performed or goods to be delivered. Advance customer payments for newspaper subscriptions or extended warranties are unearned revenues at the time of sale. At the end of each accounting period, adjusting entries must be made to recognize