This document provides an overview of adjusting entries and preparing an adjusted trial balance. It discusses the time period and accrual assumptions, the need for adjusting entries to follow revenue recognition and matching principles, and the major types of adjusting entries for prepayments and accruals. Examples are provided for preparing adjusting entries for various accounts. The adjusted trial balance is compared to the unadjusted trial balance, and it explains how the financial statements are prepared directly from the adjusted trial balance accounts.
1. Chapter 3 Adjusting the Accounts Prepared by Mohd.Mohsin Assistant Professor of Finance IIUC 01716879886 Mohd.Mohsin,Assistant Professor,IIUC,mohsinmdpur@yahoo.com.017167879886
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7. GAAP RELATIONSHIPS IN REVENUE AND EXPENSE RECOGNITION Revenue-Recognition Principle Revenue recognized in the accounting period in which it is earned Mohd.Mohsin,Assistant Professor,IIUC,mohsinmdpur@yahoo.com.017167879886 Time-Period Assumption Economic life of business can be divided into artificial time periods Matching Principle Expenses matched with revenues in the same period when efforts are expended to generate revenues