
Adjusting Entries Explained | Accounting How To | How to Pass Accounting Class
Adjusting Entries Explained | Accounting How To explains why adjusting entries are needed in accrual accounting, revenue recognition and the matching principle, gives examples of adjusting entries, explains prepaid assets and unearned revenue accounts, and introduces accruals and deferrals. This is an accounting tutorial for accounting students, business owners, and bookkeepers to explain accounting basics for beginners. Featuring Terrance the T-Account Rex and accounting educator, Caroline Grimm, this accounting tutorial is part of the playlist series How to Pass Accounting Class and Accounting Basics for Business Owners. ⏰ Accounting How To Time Stamps 00:00 Introduction to Adjusting Entries 00:50 Why do need to do Adjusting Entries 01:20 Accrual Method of Accounting 01:35 Revenue Recognition and Matching Principle 01:59 When are adjusting entries done? 02:30 What kinds of adjusting entries are needed? 02:37 What kinds of accounts are adjusted? 03:02 Prepaid and Unearned accounts 05:44 Never adjust cash in an adjusting entry 06:36 Start with the original transaction 06:46 Example: Customer Deposit 08:45 Example: Prepaid Insurance 10:16 Accruals and deferrals