Accounting

Accounting Cycles

American InterContinental University

Unit 2 IP

ACCT205-1204B-06

October 14, 2012

Abstract

As an accountant in a moderate-sized manufacturing corporation, I will give guidance and training to an accountant clerk who is new to the accounting division of the organization. Also, I will be given an explanation on why adjusting entries are essential and give a description of the four types of adjusting entries.

Accounting Cycles

The accounting cycle is the sequence of accounting task that is done to record all economic transactions of the corporation (Career Education Corporation [CEC], 2010).

It is essential to prepare and bring-up- to-date a business’s journal, ledger, trial balance, and adjusted trial balance regularly. Modifying entries confirm accurate quantities of incomes and costs are logged in the exact stated time period. The ccurrent equilibriums may not symbolize the correct balances for the reason that errors were recognized in logging in the transactions; otherwise, the accounting records may not be updated to show the changes that were made in earlier dealings (Editorial Board [EB], 2012, p. 42).

The four types of adjusting entries you need to know are: a deferred expense, which includes depreciation expenses; deferred revenues; accrued expenses and accrued revenues (EB, 2012, p. 42).

Deferred expenses (or prepaid expenses) early payments and recorded as assets prior to being utilized (EB, 2012, p. 42). Example: LLC Corporation paid $40,000 toward the next month’s rent; this will be recorded as a prepaid expense by the company as shown below:

Adjusting Entry | Debits | Credits |

Prepaid expenses (asset) | 40,000 | |

Rent expense | | 40,000 |

Additional adjusting entries will be depreciation expense; this is a distinguishing kind of expense that has been pay for beforehand and is treated separately from other expenses that have been paid in an advance. Depreciation expense reveals when a long-term...