Training a New Accounting Clerk
Autor: hano2x • September 1, 2013 • Research Paper • 665 Words (3 Pages) • 1,063 Views
Training a New Accounting Clerk
AIU Online
ACCT205-1301A-05
Principles of Accounting I
Professor Riese
February 23, 2013
ABSTRACT
The accounting department has a new clerk, this will explain the process used for adjusting entries, the importance of this task, and the vulnerability it leaves open in regards to ethics.
Editorial Board defines adjusting entries as a journal entry made to ensure that the correct amount of revenues and expenses are recorded to the proper accounts, for the proper time- periods in the accrual-based accounting system (2012). These entries are necessary when payment services are performed before payment is issued, after purchases have been made on credit, and when timecards are calculated, and when something is sold for more than the value of the item.
The first type are prepaid expenses, these are expenses that have been paid before being used. One example of this expense is like a gym membership, you prepay for this service, even though you have not used it yet, it is available to you. When each month passes the amount for the month’s fees are deducted, keeping the books up-to-date.
Depreciation is ‘defined as the periodic cost of equipment that is spread over the future periods in which the equipment is expected to be used (Horngren, Sundem, and Stratton 2002). The scenario can be compared to a new car; when you purchase a vehicle it is worth X amount of dollars. For every mile driven, the car’s value goes down or depreciates, when you try to sell the vehicle, it has a life value given, some refer to it as the BLUE BOOK value. This book shows the dollar value for the vehicle; miles driven, damages, and to date value (Kelly Blue Book, 2013).
Unearned revenue is the next type of adjustment, it is used when a payment is received for work that has not been done yet, and is considered a liability. An example would be a deposit used to secure services. This money must be recorder as a debit to cash and a credit to unearned revenue (Tuck, 2013).
Accrued expenses are the fourth type of
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