Adjusting entries can be classified as either prepayments or accruals.
Prepayments
1) Prepaid expenses: Expenses paid is eash and recorded as assetn before they are used or consumed. prepayments offer occur in regard to insurance, supplies, advertising and rent.
2) Unearned revenues: Cash received and recorded as liabilities before revenue is earned. Such items as rent, and customer deposits for future service may result in unearned reveries.
Accruals:
1) Accrued parvenus: Revenues rarned but not yet received in cash or recorded. They may result from services that have been performed but neither billed nor collected, as in the case of commissions and been.
2) Accrued Expenses: Expenses incused but not yet paid in cash or recorded. Interest, rent, tuxes, wages and salaries can be accrued expenses.
Prepayments
1) Prepaid expenses: Expenses paid is eash and recorded as assetn before they are used or consumed. prepayments offer occur in regard to insurance, supplies, advertising and rent.
2) Unearned revenues: Cash received and recorded as liabilities before revenue is earned. Such items as rent, and customer deposits for future service may result in unearned reveries.
Accruals:
1) Accrued parvenus: Revenues rarned but not yet received in cash or recorded. They may result from services that have been performed but neither billed nor collected, as in the case of commissions and been.
2) Accrued Expenses: Expenses incused but not yet paid in cash or recorded. Interest, rent, tuxes, wages and salaries can be accrued expenses.