Accounting Cycles: Four types of Adjusting entries
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You are an accountant in a medium-sized manufacturing company. You have been asked to mentor an accounting clerk who is new to your accounting department.
-Explain why adjusting entries are necessary.
-Describe the 4 types of adjusting entries, and provide a manufacturing industry example of each.
-Describe how these entries would be recorded in a computerized accounting system.
-Describe 1 ethical issue that could result from the preparation of these manufacturing entries.
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Solution Summary
The 321 word cited solution explains the four types of adjusting entries with examples and explanations.
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Explain why adjusting entries are necessary.
Adjusting entries are necessary to
1. Make corrections
2. Convert cash basis to accrual
3. To match revenue to expenses
At the end of the process, account balances should be properly stated and the matching of revenue to expenses should be correct. There are two types of adjusting entries: Deferrals and accruals. Both are used to affect changes needed.
Describe the 4 types of adjusting entries, and provide a manufacturing industry example of each.
The four general types are: ...
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