List the Four Basic Types of Accounts That Require Adjusting

question 136

Essay

List the four basic types of accounts that require adjusting entries and give an example of each.
1. Prepaid expenses; example: prepaid insurance
2. Unearned revenues; example: an attorney's retainer fee
3. Accrued revenues; example: unpaid interest earned on a note receivable
4. Accrued expenses; example: unpaid wages owed to employees
157. Under the accrual basis, some accounts in the ledger require updating at the end of the period. Discuss the three main reasons for this updating and give an example of each.