Adjusting Entries For Accrual Accounting (End Of Period Adjustments On B/S & I/S)

End of period adjusting entries on balance sheet that are required to recognize revenue or expenses on income statement for the period, any changes in cash is not included, converting operating revenue and expense accounts to accrual basis accounting, first look at how the basic accounts function on the balance sheet, then setup (T Accounts) to demonstrate the adjustments to each of the accounts, based on accrual accounting matching principle allocating income and expenditures to the period they actually occur, example will look at (1) preliminary balance, (2) adjusting entry required, and (3) correct balance, adjusting entries require both a balance sheet and income statement account adjustment when made, adjusting entries are classified into four basic types plus depreciation as a fifth type, adjust for (1) operating assets & liabilities and (2) adjust for nonoperating revenue & expenses, starting with liability accounts (1) unearned revenue (deferred revenue) and (2) accounts payable (accrued expense), for asset accounts (3) accounts receivable (accrued revenue) and (4) Inventory, Prepaid Assets (deferred expense), use accrual accounting to allocate income and expenses to the period they actually occur, detailed accounting calculations with balance sheet and income statement (T Account) amounts showing adjusting entries for each case stated above by Allen Mursau