Adjusting the Accounts

Answer

Adjusting entries are two classes as either Deferrals or Accruals.

1. Prepaid expenses:Expenses are paid in cash as advance for future expenses. These expenses are not yet used up or have not yet expired.
2. Unearned Service Revenue:Cash received from customer for work before services are performed

1. Accrued revenues:Revenues earned for Service performed but not yet received in cash from customer or recorded.
2. Accrued Expenses:Expenses incurred but not yet paid in cash or recorded.