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Accounting Unit 2 Essay

1063 words - 5 pages

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 ...view middle of the document...

An example of this is if the company has to order a product to come by mail and it has been not been recorded but the product has been shipped. At this point it may have to be recorded and reversed once the product is received and paid for to be recorded in the billing.

Accrued Revenue 1,650 Revenue 1,650

The third adjusting entry is prepaid expenses. Prepaid expenses are any type of expenses that are paid in advance. An example of a prepaid expense is when you pay up the rent months in advance for the building the company occupies. When dealing with prepaid expenses it may be necessary to allow for a bad debt expense. Allowance for bad debt Expense (Adjusting EN, 2010)
Rent Expense 2,500 Prepaid Rent 2,500

The last adjusting entry is unearned revenues. Unearned revenue is when you receive payment for a service before the service has been provided. An example of this is when a customer has paid for services prior to receiving the service from the company. This service would be recorded as unearned revenue and then adjusted.

Revenue 3,862 Deferred Revenue 3,862
Revenue 3,862 Deferred Revenue 3,862

These entries would be recorded in a computerized accounting system by following the steps of accounting and applying the adjusted journal entries. A computerized system makes your accounting responsibilities a little easier to maintain. Remembering to record all transactions and any other business within the company is the most important. When using computerized entries, all you have to do is go to your software program and input the numbers. When it is time for the period to close, a trial balance is done. This trial will include a budget of month to month to ensure all accounts are balance correctly. As the adjusting entry is recognized, the journal entry input is performed. After these entries have been input and reviewed by the senior accountant or management, it can be put into the system and posted.

Learning the importance of adjusting journal entries can benefit a...

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