Adjusting Entries

On Your Test

You will be expected to know the following for multiple choice concept questions. Almost all questions will relate to these things:

Why an adjustment is necessary? What is the purpose of adjusting entries?

What types of accounts are adjusted?

When is an adjustment necessary for an expense?

When is an adjustment necessary for revenue?

What does it mean for an account balance to be “correct”? This will vary with the type of account.

Common accounts that are adjusted and what occurs to require the adjustment

You will be asked to do the following on problems and multiple-choice problems that require calculations.

Prepare (record) adjusting journal entries

Compute interest expense or interest revenue

Compute the amount of prepaid used up

Compute depreciation expense to be recorded

Compute the amount of unearned revenue that has been earned

Determine the corrected/adjusted account balance for a particular account