How Adjustments change the Accounting Equation

Question 1

Deferrals: Prepaid Expenses

Answer 1

asset-expense relationship. -assets +expenses(SE)

Question 2

Deferrals: Supplies

Answer 2

-assets(prepaid insurance) +expenses(SE,RE)

Question 3

Deferrals: Depreciation

Answer 3

+assets(Accumulated Depreciation Equipment) +expenses(SE,RE)

Question 4

Deferrals: Unearned Revenues

Answer 4

liability-revenue relationship. -liabilites(unearned service revenue) +revenue(SE, retained earnings)

Question 5

Accruals: Accrued Revenues

Answer 5

asset-revenue relationship. +assets(accounts receivable) +revenues(SE,RE)

Question 6

Accruals: Accrued Expenses

Answer 6

liability-expense relationship. +liabilities(interest payable) +expenses(SE,RE)

Question 7

Accruals: Accrued Salaries

Answer 7

+liabilities(Salaries and wages Payable) +expenses(SE,RE)