Category: Bookkeeping 101

Accrued expenses

May 18, 2020 Bookkeeping 101 by ann
How to Adjust Journal Entry for Unpaid Salaries The most common method of accounting used by businesses is accrual-basis accounting. Two important parts of this method of accounting are accrued expenses and accrued revenues. Accrued expenses are expenses that are incurred in one accounting period but won’t be paid until another. Primary examples of accrued
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How Do You Record Adjustments for Accrued Revenue?

May 18, 2020 Bookkeeping 101 by ann
When the company collects the $50, the cash account on the income statement increases, the accrued revenue account decreases, and the $50 on the income statement will remain unchanged. Contrary to Cash Basis Accounting, in Accrual Basis Accounting, financial items are accounted when they are earned and deductions are claimed when expenses are incurred, irrespective
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Understanding Accrued Expenses vs. Accounts Payable

May 18, 2020 Bookkeeping 101 by ann
Accruals are revenues earned or expenses incurred which impact a company’s net income on the income statement, although cash related to the transaction has not yet changed hands. Accruals also affect the balance sheet, as they involve non-cash assets and liabilities. Accrual accounts include, among many others, accounts payable, accounts receivable, accrued tax liabilities, and
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Accrual Accounting & Prepayments

May 15, 2020 Bookkeeping 101 by ann
This liability may be recorded as a repair expense or a credit to “accrued expenses payable” in the amount of $12,500. The accrued expense may then be adjusted when the company receives the actual invoice, and it could reflect a value lower or higher than the estimated expense. They are considered to be current liabilities
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Accrued Income

May 15, 2020 Bookkeeping 101 by ann
The offset entry to the debit entry of accrued payroll is a credit entry of either cash payments or payroll-related liabilities. A business that uses the accrual basis of accounting recognizes revenue and expenses in the accounting period in which they are earned or incurred, regardless of when payment occurs. This differs from the cash
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