The National Directory of Certified Public Accountants

Ask A CPA - Bookkeeping & Write-up

What Are Examples Of Required Accruals To Adhere To The Matching Principal ?

Once bookkeeping procedures have been completed, the bookkeeper or CPA prepares certain adjustments to recognize events that, although they did not occur in conventional form where there was exchange of money, are in substance already completed transactions. The following are the most common examples that require adjustments, accrued revenue such as interest earned on a bank account but not yet received. Accrued expenses such as wages or rent or utilities incurred but not yet paid. Unearned revenue such as earning subscription revenue that had been collected in advance. Prepaid expense such as expiration of a prepaid insurance premium. Depreciation is the recognizing of the cost of a asset as expense spread over its useful economic life. Inventory when recording the cost of goods sold on the basis of a period's purchases and the change between beginning and ending inventory balances. Receivables recognizing bad-debt expenses on the basis of expected uncollected amounts.

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