based on your experience, what is the most efficient method of learning advanced accounting topics?
November 24th, 2009 | by admin |how do u learn to do trial balance adjustment very quickly?? Thanks.
You need to understand why adjustments are needed. On an accounting process you just enter the transactions and events as they occur. At the end of a period, you prepare a trial balance to check the arithmetical accuracy to ensure that double entry principles have been applied.
In order to prepare statements to assess and analyze performance and financial position, you need to make adjustments to match the revenues earned with the expenses incurred to generate that revenue. Periodic adjustments are usually required for the following:
1. Prepaid expenses and income
2. Accrued expenses and income
3. Depreciation and amortization
4. Unrecorded transactions
5. Correction of errors
Prepaid expenses are those expenses that cover more than one accounting period such as insurance, rent, supplies. Prepaid revenues are revenues received but not earned.
Accrued expenses are expenses incurred but not yet paid such as salaries, interest and utilities. Accrued revenues are the revenues which have been earned but the payment for which is yet to be received.
Depreciation is the rational and systematic allocation of the cost of a tangible fixed asset over its useful life and amortization is used for intangible assets.
There may be cases where a transaction or event may have been totally omitted from recording
Correction of errors arise when mistakes have been discovered in recording of transactions and therefore need correction.
Method of doing adjustments:
For prepayments and accruals, you need to determine how the original transaction was recorded. If the original entry is made to prepayment account, you need to adjust for the expired portion. If the transaction was recorded as an expense, you need to adjust for the unexpired portion.
I am sure you know how to adjust for depreciation, amortization, total omission and correction of errors. Hence I will ignore.
2 Responses to “based on your experience, what is the most efficient method of learning advanced accounting topics?”
By lupin3d on Nov 25, 2009 | Reply
I think the best way for you to learn accounting is to understand the actual business process. Try to apply for part-time book keeping jobs that will enlighten you on how the documents that support our ledgers are used. This way, you will know what accounting is all about.
References :
Experience.
By rehman vohra on Nov 25, 2009 | Reply
You need to understand why adjustments are needed. On an accounting process you just enter the transactions and events as they occur. At the end of a period, you prepare a trial balance to check the arithmetical accuracy to ensure that double entry principles have been applied.
In order to prepare statements to assess and analyze performance and financial position, you need to make adjustments to match the revenues earned with the expenses incurred to generate that revenue. Periodic adjustments are usually required for the following:
1. Prepaid expenses and income
2. Accrued expenses and income
3. Depreciation and amortization
4. Unrecorded transactions
5. Correction of errors
Prepaid expenses are those expenses that cover more than one accounting period such as insurance, rent, supplies. Prepaid revenues are revenues received but not earned.
Accrued expenses are expenses incurred but not yet paid such as salaries, interest and utilities. Accrued revenues are the revenues which have been earned but the payment for which is yet to be received.
Depreciation is the rational and systematic allocation of the cost of a tangible fixed asset over its useful life and amortization is used for intangible assets.
There may be cases where a transaction or event may have been totally omitted from recording
Correction of errors arise when mistakes have been discovered in recording of transactions and therefore need correction.
Method of doing adjustments:
For prepayments and accruals, you need to determine how the original transaction was recorded. If the original entry is made to prepayment account, you need to adjust for the expired portion. If the transaction was recorded as an expense, you need to adjust for the unexpired portion.
I am sure you know how to adjust for depreciation, amortization, total omission and correction of errors. Hence I will ignore.
References :