会计英语培训资料(英文版)(ppt 29页)
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会计英语培训资料(英文版)内容提要：
How do you tell the difference between deferrals and accruals?
If cash is received or paid in the current period, but the revenue or expense relates to a future period, the revenue or expense is a deferred item. If cash will not be received or paid until a future period, but the revenue or expense relates to the current period, the revenue or expense is an accrued item.
The debit balance of $2400 in A prepaid insurance account represents a December 1 prepayment of insurance for 24 months. At the end of December the insurance for one month turn into reality.
Attention:
(1) the balance of a prepaid (deferred) expense is an asset that will become an expense in a future period.
(2) What is the effect of omitting adjusting entries?
On the income statement, Supplies Expense and Insurance Expense will be understated by a total of $1340.
On the balance sheet, Supplies and Prepaid Insurance will be overstated by a total of $1340.
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