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Accruals & Deferrals Handout Accruals: (Adjustments when cash is NOT received or paid) To Recognize Interest revenue when earned (even though the cash is not
Accruals & Deferrals Handout Accruals: (Adjustments when cash is NOT received or paid) To Recognize Interest revenue when earned (even though the cash is not received yet) Adjustment: (ie. Note Receivable is $10,000; 1% interest; 3 months of interest earned) To Recognize Expenses when incurred (even though the cash is not paid yet) Adjustment: (ie. Weekly salary is $5,000; Year-end occurs on Thursday) Deferrals: (Adjustments when Cash is collected in advance) (ie Oct 1, received an $12,000 cash advance for a 1 year contract to provide monthly services) (Adjustment when Cash is paid in advance) (ie April 1, paid $6,000 for a 1 year lease) (Adjustment for Supplies) (ie purchased $2,400 of supplies on account. At year end, $200 of supplies remain on hand)
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