Key Accounting Principles Volume 1, 4th Edition - Textbook - page 123

Chapter 5
The Accounting Cycle: Adjustments
123
journal Page 1
date
2016
account title and explanation Pr debit credit
Jan 31 Interest Expense
25
Interest Payable
25
Record one month of accrued interest
Jan 31 Insurance Expense
100
Prepaid Insurance
100
Record one month of insurance used
Jan 31 Unearned Revenue
200
Service Revenue
200
Record revenue now earned
Jan 31 Depreciation Expense
150
Accumulated Depreciation
150
Record depreciation for one month
Jan 31 Accounts Receivable
1,000
Service Revenue
1,000
Record accrued revenue
______________
FIGURE 5.23
The preparation of the worksheet is optional. It is possible to simply prepare the journal entries as
shown in Figure 5.23 and post them to the general ledger, then create the adjusted trial balance
without preparing a worksheet. However, in a manual accounting system, it is a good idea to
constantly check to ensure all accounts remain in balance because going back to find errors can be
a difficult process.
ASPE states that private companies must prepare financial
statements at least once per year. Therefore, the adjustments
process must be completed just as often.
On the other hand, IFRS requires companies to prepare financial
statements at least once per quarter. This means that the accounts
will be adjusted at least four times per year.
ASPE vs IFRS
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