ACC201 Week 2 Discussion 1 Four Types of Adjustments

Description of the adjustment and why it’s necessary.

The adjustment I chose was accrued expenses. Accrued expenses is recognized in the books before it has been paid. It represents a company’s obligation to make future cash payments, they are shown on a company’s balance sheet as current liabilities, also known as accrued liabilities .

Example of a transaction or event, with dates and amounts that require

An example of accrued expenses are salaries payable and also interest payable. Salaries are wages earned by your employer in one accounting period. Interest payable is a interest expense that has been incurred by not being  paid to you yet.

Status of the affected accounts before and after the adjustment.

Accrued expenses affect the account by increasing expenses on the income statement and reducing the net income . Also it increases the liabilities on the balance sheet . The Effects on financial statements of not making the adjustment is nothing due to the accrued expense is a liability account within itself and paying off the liability later doesn’t affect the companies income statement at all . Also if its not recorded on the statement it will not appear on the financial statement .