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Basic Bookkeeping Workshop Day 5 9
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Accounting Cycle ReviewLecture1.1
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Step 5: Prepare an Unadjusted Trial BalanceLecture1.2
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Step 6: Adjust the EntriesLecture1.3
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Adjusting Entries Category 1. Accrued ExpensesLecture1.4
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Adjusting Entries Category 2. Accrued RevenuesLecture1.5
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Adjusting Entries Category 3. Unused SuppliesLecture1.6
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Adjusting Entries Category 4. Unearned RevenuesLecture1.7
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Day 4: Challenge & RecapLecture1.8
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Day 5: Challenge / AssignmentLecture1.9
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Basic Bookkeeping Workshop Day 6 7
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Accounting Cycle ReviewLecture2.1
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Adjusting Entries Category 5. Depreciation of Property & EquipmentsLecture2.2
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Adjusting Entries Category 6. Prepaid ExpensesLecture2.3
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Adjusting Entries Category 7. Bad DebtsLecture2.4
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ActivityLecture2.5
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Day 5: Challenge & RecapLecture2.6
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Day 6: Challenge / AssignmentLecture2.7
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Basic Bookkeeping Workshop Day 7 7
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Introduction (What is Accounting?)Lecture3.1
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Accounting Cycle ReviewLecture3.2
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Day 6 Assignment Answers (Adjusting Entries at December 31, 2006)Lecture3.3
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Closing EntriesLecture3.4
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Challenge Day 6Lecture3.5
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Challenge Day 7Lecture3.6
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Question and AnswerLecture3.7
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Basic Bookkeeping Workshop Day 8 7
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Accounting Cycle ReviewLecture4.1
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Step 8: Close the EntriesLecture4.2
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Step 9: Post-Closing Trial BalanceLecture4.3
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Prepare Reversing EntriesLecture4.4
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Financial StatementsLecture4.5
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Day 7: Challenge & RecapLecture4.6
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Day 8: Challenge / AssignmentLecture4.7
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Basic Bookkeeping Workshop Day 9 8
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Accounting Definition (Recap)Lecture5.1
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Accounting Cycle ReviewLecture5.2
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Financial Statements ReviewLecture5.3
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Review of Internal Control SystemLecture5.4
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Five Components of Internal ControlLecture5.5
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Day 8 Challenge (Answers) (Chart of Accounts)Lecture5.6
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Special TopicsLecture5.7
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Question and AnswerLecture5.8
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3 Comments
Accrued Expenses- refers to expenses that has been incurred within an accounting period but not yet paid for. Examples include salaries and wages payable, utilities payable, interest payable, etc
Accrued Revenues- refers to earnings from providing a product or service that has not yet been collected or paid to the business. Due to this, accrued revenue is recorded as a receivable owed by the customer for the business transaction.
Unearned Income/Revenue-Income received by a business in advance of either the delivery of goods or rendering services to their customer(s). They should therefore be reported as a liabiity first and then they can be reported as income or revenue/ increase to the owner’s equity once the goods/services are delivered or completed
Depreciation of Property and Equipment- Depreciation is the process of allocating the cost of long-lived/fixed assets over their useful life to account for a reasonable amount of exhaustion, wear, and tear of said assets as they are used in the course of business activities. Since these assets help generate income for the business, a portion of the cost of these assets should be reported as expense during each accounting period, so their value would be more accurately reflected in the financial statements
Prepaid expenses-refers to expenses that are paid in advance before they are incurred (such as rent expense or insurance expense). They are initially reported as assets, but once their value is consumed or used up, they should be reported as expenses at the end of the accounting period. Otherwise, the assets of the company will be overstated and the expenses will be understated.
Bad debts- refer to the outstanding balances of a business that are believed to be uncollectible or can no longer be paid by the customers/debtors. Therefore, since businesses recognize that they may not be able to collect on all their accounts receivables because extending credit always involves some risk, they make allowances or estimates of the percentage of bad debts they may incur, debit this amount as an expense and credit it to a contra-asset account to reduce the total amount of receivables listed on the balance sheet.
The other types of adjusting entries are:
Depreciation is the process of allocating an asset’s cost over the course of its useful life. Depreciation applies to fixed assets, such as buildings, vehicles, manufacturing furniture and equipment, and other tangible assets that a business owns and uses throughout the course of an accounting period. Expensed based on the time the item is used by the business rather than when it was purchased.
Expense deferral is required when a business pays for an item before it is actually incurred and will benefit more than one accounting period, such as paying insurance in advance for the year. A deferred expense is categorized as an asset since it represents prepaid services or goods with potential future economic benefit. The asset is reduced and converted into an expense as incurred, requiring an adjustment entry.
Estimates are adjusting entries that typically include non-cash transactions. In line with the accounting principles of matching and conservatism—the latter of which requires the preparation of business accounts with caution and a high degree of verification—. They appropriately reflect the value of assets and liabilities on a business’s balance sheet and recognize likely costs on the income statement.
Other types of adjusting entries:
Deferrals – expense that will benefit more than one accounting period is recorded as prepaid expense
– deferred revenue is revenue that a customer pays the business, for services that haven’t been received yet
Depreciation – physical objects a business owns that last over one accounting period, such as equipment, furniture, buildings, etc.