Adjusting Entries

    ensure that the revenue recognition and expense recognition principles are followed.

•         are necessary because the trial balance may not contain up-to-date and complete data.

are required every time a company prepares financial statements.

Adjusting entries are classified as either (????) or (????) .

•         are expenses or revenues that are recognized at a date later than the point when cash was originally exchanged. (Cash comes first)

Expenses paid in cash before they are used or consumed.

Cash received before services are performed.

Revenues for services performed but not yet received in cash or recorded.

Expenses incurred but not yet paid in cash or recorded.