 | |
| Learning
Goal 4: | Prepare
Adjusting Entries
for Prepaid Expenses 39 |
|
A Closer Look at Prepaid Expenses 40
Identify Prepaid Expenses
40
How a Prepayment Becomes an Expense 41 How to
Adjust Prepaid Expenses 44
The Two Objectives
44
Objective I: Prepare the Adjusting
Journal Entry 46
Step 1: Identify the Key Information Type 46
Step 2: Select
the Proper Method to Calculate
Cost Used Up 52
| Using
Information Type 1: The Asset Cost
Remaining 54 |
| Using
Information Type 2: The Asset Cost
Used Up 58 |
| Using
Information Type 3: The Cost Per Unit
of the Asset 61 |
| Using
Combinations of Information Types 64 | Step
3: Prepare the Adjusting Journal Entry 67
Objective II: Determine
the New Balances
of the Accounts Affected 69
Three Easy
Steps 69
Practice 70
|
| Learning
Goal 5: | Prepare
Adjusting Entries
for Unearned Revenues 73 |
| A
Closer Look at Unearned Revenue 74
Identify Unearned Revenues
74
How the Liability Becomes a Revenue 75
How to Adjust
Unearned Revenues 76
The Two Objectives 76
Objective
I: Prepare the Adjusting
Journal Entry 78
Step 1: Identify
the Key Information Type 78
Step 2: Select the Proper Method to
Calculate the
Revenue Earned 84
| Using
Information Type 1: The Unearned
Revenue Actually Remaining 86 |
| Using
Information Type 2: The Unearned
Revenue That Was Earned 89 |
| |
| | |
Learning
Goal 1: | Explain
the Meaning of
“Accounting Period”
3 | | |
Overview
of Accounting Periods 3
The Need to Measure Change 4
The Best Way of Measuring Financial Change 7
Vocabulary
9
Practice 10
| |
| Learning
Goal 2: | Explain
the Basic Principles
for Recording Revenues and
Expenses
12 | | |
Accrual
Basis Accounting 12
Overview of Accrual Basis 12
Accrual Accounting Principles 14
Applying the Revenue Recognition
Principle 15
Applying the Matching Principle 16
Cash Basis Accounting—A Simplified
Alternative 19
Overview of Cash Basis 19
How to Apply Cash Basis
20
Illustration of Cash and Accrual Method
Differences 21
Revenues 21
Expenses 22
Review and Vocabulary
23
Practice 24 | |
| Learning
Goal 3: | Explain
the Concept of
Adjusting Entries 32 |
| |
Overview
of General Features 32
Summary 32
What Are
Adjusting Entries? 33
Why Adjusting Entries Are Needed 33
The Common Qualities of Adjusting Entries 33
Overview of Adjustment
Types 36
The Five Causes of the Five Adjustments 36
Classification, Valuation, and Timing 37
Review 38 | |
| | |
