Adjusting Entries

Why do firms need to adjust their books at the end of the period? In this video, I explain what adjusting entries are, why they are needed under accrual accounting, and how they affect the financial statements. Using simple examples, I show how companies record revenues and expenses driven by the passage of time. I illustrate this with examples of accrued revenue, bonus payable, deferred revenue, and prepaid rent.

This video is part of the series From Transactions to Financial Statements. Suggested order:

1. Balance Sheet Transactions
2. Income Statement Transactions
3. Adjusting Entries
4. Adjusting Entries in Practice

Видео Adjusting Entries канала Accounting with Alina