Problem
Terminology and Concepts- Adjusting Entries:
a. If utility expense accrues as incurred, why do we wait until we get the bill to record it?
b. What are adjusting entries adjusting?
c. What is being deferred in a deferral adjusting entry? Provide a real life example for an expense deferral and a revenue deferral that you have personally encountered.
d. What is being accrued in an accrual adjusting entry? Provide a real life example for an expense accrual and a revenue accrual that you have personally encountered.
e. Which financial statements would be affected if revenue earned, but not yet received was not included in the books for the period? How would they be affected? Who would care if the entry were not made?
f. Should a firm record in the accounting records interest expense incurred but not yet paid? Why?
g. Should the firm record in the accounting records the use of supplies that have already been paid for (the supplies were included in the supplies account when they were acquired)? Why?