Question - How to adjust entries into account?
Answer -
Entries can be adjusted into account by sorting entries into five categories:
- Accrued expenses: Expenses have been incurred, but the vendor’s invoices are not generated or processed yet
- Accrued revenues: Revenues have been earned, but the sales invoices are not generated or processed yet.
- Deferred revenues: Money was received in advance of having been paid or earned.
- Deferred expenses: Money was paid for a future expense.
- Depreciation expense: An asset purchased in one period must be allocated to expense in each of the accounting periods of the asset’s useful life.