Professional Documents
Culture Documents
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
3-2
C1
C2
Accounting
3-4
C2
Non-GAAP
Accounting
3-5
C2
$ - $ - $ - $ -
May Jun Jul Aug
$ - $ - $ - $ -
Sep Oct Nov Dec
$ - $ - $ - $ 2,400
C2
$ - $ - $ - $ -
May Jun Jul Aug
$ - $ - $ - $ -
On the accrual basis,
Sep Oct Nov Dec $100 of insurance
$ - $ - $ - $ 100
Insurance Expense 2010
expense is recognized in
$
Jan
100 $
Feb
100
Mar
$
Apr
100 $ 100
2011, $1,200 in 2012,
May Jun Jul Aug and $1,100 in 2013. The
$ 100 $ 100 $ 100 $ 100
Sep Oct Nov Dec expense is matched with
$ 100 $ 100 $ 100 $ 100
C2
C2
C3
ADJUSTING ACCOUNTS
An adjusting entry is recorded to bring an asset or
liability account balance to its proper amount.
Framework for Adjustments
Adjustments
Paid (or received) cash before Paid (or received) cash after
expense (or revenue) recognized expense (or revenue) recognized
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P1
PREPAID INSURANCE
(a) On 12/1/11, FastForward paid $2,400 for insurance for
2-years (24-months, December 2011 through November
2013). FastForward recorded the expenditure as Prepaid
Insurance on 12/31/11.
What adjustment is required?
P1
SUPPLIES
(b) During 2011, FastForward purchased $9,720 of supplies.
FastForward recorded the expenditures in the asset account,
“Supplies.” On December 31, 2011, a count of the supplies
indicated $8,670 on hand, so $1,050 of supplies were used
during December.
What adjustment is required?
P1
P1
DEPRECIATION
Depreciation is the process of allocating the
cost of a plant asset over its useful life in a
systematic and rational manner.
END OF CHAPTER 3