Accounting Unit 2

Principles of Accounting I

Abstract

As an accountant in a medium-sized manufacturing company, I have been asked to mentor an accounting clerk who is new to the accounting department. I’m going to explain several things to the accounting clerk to get them familiar with adjusting entries. An accountant is responsible for all financial ends and outs of the company. They are to maintain and prepare financial records for the company. I think as an accountant that the most important thing to do is being organized; therefore you document and record all entries that the company has.

Adjusting journal entries are usually made at the end of an accounting closing period so that to the account balances reflect revenue and expenses incurred during that time period. This is important to make sure that the accounts are complete, accurate and sometimes closed at the end of the accounting period .An adjusting entry will be needed if the company has paid an expense in advance or over a time period longer than the normal pay period. It will also be needed if revenue has been earned or expenses have been incurred and the items have not been recorded.

There are four types of adjusting entries which I will provide a manufacturing industry for example for each. The first type of an adjusting entry is accrued expense. Accrued expenses are expenses that have accrued during the accounting period that have not been paid or recorded. An example of accrued expenses in a manufacturing industry is the payroll for all employees. All employees are paid once a month, which is the last day of the month. Although they are paid on the last day of each month, the actually receive pay the next month in the next pay period.

Salaries Expense 110,000 Salaries Payable 110,000

The next adjusting entry is accrued assets or accrued revenues. Accrued assets or revenue is when the asset has been earned sold or completed that has not been paid or recorded. An example of this is if the...