Accounting Problem

Running Head : Accounting Problem

Accounting Problem

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Accounting Problem

Accomplishment of Adjustment Process

Accounting of journal entries that transform a company 's accounting records to the accrual basis of accounting are Adjusting Entries Adjustment process updates the accounting entries , is required at the end of the period prior to the preparation of Financial Statements Before the end of the period , adjustment process allows proper apportion of the accounting periods , record of revenue or expenses already earned that may not have been recorded earlier

(Harrison , 2008

Skipping of Adjustment Process in Financial Statements

In this case , the financial statements may not exhibit the correct amount at the end of the period due to omission of adjustment process which is needed prior to its issuance . Few examples are discussed below when financial statements are not able to present correctly due to skipping of adjustment process

Expenses revenues omitted from financial statements , if they occur in that accounting period

Sometimes , company records prepaid in their book of accounts , which must be adjusted between two or more accounting periods (Harrison , 2008

Relation of Adjusting Process with Matching Principle

The matching principle describes that all the revenue earned in one accounting period must be matched with the expenses incurred in the same accounting period to generate that revenue (Harrison , 2008 ) For instance , if a company pays rent in advance for the whole year starting from March 1 , 2009 to February 28 , 2010 and the company 's financial year ends on...