BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Adjusting entries usually involve one or more balance sheet accounts and one or more accounts from your profit and loss statement. In other words, when you make an adjusting entry to your books, you are adjusting your income or expenses and either what your company owns (assets) or what it owes (liabilities).

Detailed explanation-2: -Adjustment entry always affects at least one real account and one nominal account. It is an account used to record income, gains, expenditure, and losses in a particular accounting period of time. It includes all accounts in the income statement, including owner’s withdrawal.

Detailed explanation-3: -Adjusting entries fall into two broad classes: accrued (meaning to grow or accumulate) items and deferred (meaning to postpone or delay) items. The entries can be further divided into accrued revenue, accrued expenses, unearned revenue and prepaid expenses which will examine further in the next lessons.

Detailed explanation-4: -Adjusting entries always involve a balance sheet account (Interest Payable, Prepaid Insurance, Accounts Receivable, etc.) and income statement account (Interest Expense, Insurance Expense, Service Revenues, etc.).