《实用会计英语》（第四版）教学课件 PPT chapter8.ppt

8.4 Adjustments to the Accounts The end-of-period process of updating the accounts is called adjusting the accounts, making the adjusting entries, or adjusting the books. Adjusting entries can be divided into five categories: Prepaid expenses Depreciation Accrued expenses Accrued revenues Unearned revenues 高等教育出版社 * Prepaid Expenses Prepaid expenses is a category of miscellaneous assets that typically expire or are used up in the near future; Prepaid rent, prepaid insurance, and supplies are ex-amples of prepaid expenses; They are called prepaid expenses because they are expenses that are paid in advance; Examples: Suppose John Smith prepays three months rent on April 1, 200X, after negotiating a lease for the office of his law practice. If the lease specifies monthly rental amounts of $1,000 each, the entry to record the pay-ment for three months is a debit to the asset account, Prepaid Rent, as follows: Apr. 1 Dr. Prepaid Rent ($1,000 x 3) 3,000 Cr. Cash 3,000 Paid three months rent in advance. Apr.30 Dr. Rent Expense ($3,000 x 1/3) 1,000 Cr. Prepaid Rent 1,000 To record rent expense. 8.4 Adjustments to the Accounts 高等教育出版社 * Depreciation and Capital Assets Capital assets are long-lived assets, such as land, buildings, furniture, ma-chinery and equipment; Accountants systematically spread the cost of each capital asset, except land, over the years of its useful life. This process is called the recording of depreciation or amortization; Examples: Apr. 3 Dr. Furniture 16,500 Cr. Accounts Payable 16,500 Purchased office furniture on account. Apr.30 Dr. Depreciation Expense 275 Cr. Accumulated Depreciation-