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Adjusting Accounts for Accruals: Accrued Revenue and Expenses

Learn about accrued revenue and expenses, adjusting entries for preformed jobs not paid for, and how to update financial statements accurately. Understand accrued salaries, interest, and their impact on assets and liabilities.

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Adjusting Accounts for Accruals: Accrued Revenue and Expenses

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  1. CHAPTER 3 – ADJUSTING THE ACCOUNTS Part 2 of 3

  2. Adjusting for Accruals Accrued Revenue • are jobs that have been preformed but have not been either paid in cash or recorded on the statements. Accrued Expenses • Are expenses that are incurred in order to perform a job, that have not yet been paid for or recorded on our statements. Prior to adjustments, assets /liabilities, and revenues/expenses are understated.

  3. Accrued Expenses Accrued Interest: • When we borrow money, we need to pay interest on that money. • FV = Face Value (amount of loan) • Annual Interest Rate • Time = in terms of 1 yr.

  4. Accrued Expenses cont... Accrued Salaries • These are wages that have been preformed, but we have not paid out yet. Salaries Expense XXX Salaries Payable XXX

  5. Work for this Section Brief Exercise • 3-5 Exercise • 3-5

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