Prepayments and Accruals | Adjusting Entries

[@AccountingStuff]

Which type of Adjusting Entry do you find the hardest?

[@nathaniela.diawuo5597]

Prepayments and Accruals. It usually gets complicated for me when I get to the dates.

[@AccountingStuff]

@@nathaniela.diawuo5597 Yeah they can be tough ones to work through

[@jessemusokotamumba8586]

Than you for the amazing tutorial s,a video on provisional debt will be very helpful

[@AccountingStuff]

@@jessemusokotamumba8586 Thanks Jesse and cheers for the suggestion!

[@jasminavila4000]

I wish you would have shown an example, I'm more of a visual person and felt it would have helped me more. I love your videos but this one really lost me as I already feel lost in this topic.

[@partharora77]

Learnt more in this 10 minute video than I did reading a 30 page chapter (having spent hours!). You have a gift! Keep these videos coming!!

[@AccountingStuff]

No worries, I'm happy to help :)

[@nsl7721]

hey do you happen to remember the book you read?

[@juliacarter1280]

Facts!

[@juliacarter1280]

@@nsl7721 probably the college textbook

[@ColeCur]

Bro this is what I was saying fuck college

[@diegosegura8715]

Dude you are a master. Literally no reason to buy a college textbook.

[@AccountingStuff]

Thanks for your kind words!

[@tbedre5548]

This guy is the goat. I can’t afford a accounting course so I’m learning from you and taking notes. Thank you 🙏🏾 Yoir changing lives

[@AccountingStuff]

Good luck, hope it's making sense!

[@peterbradshaw8018]

You can use ACCA -X . The first four courses are free.

[@peterbradshaw8018]

Try Coursera or any other MOOC and apply for a scholarship .

[@cust0mEditi0n]

A thousand times, THANK YOU FOR THIS! Your videos are so well organized, entertaining, easy to watch, and short and sweet without shorting us on information. This helps so many people (like me). You're the man...

[@AccountingStuff]

Cheers buddy! I'm happy to help

[@OnlyOneHope]

I just found your channel, and it's a lifesaver!! taking my first accounting class now, 3 more to go in my Business Administration degree program. It's so cool that you share your knowledge. I'm definitely purchasing your cheat sheets for my notes. Thank you

[@AccountingStuff]

Hey Hope! Thanks, I'm glad you're finding the content helpful. Best of luck with your class!

[@JB-bm1to]

He has cheat sheets?! Where can I buy? Also I'm sure you've graduated by now. Congratulations!!!

[@carlosavina374]

Watched your adjusting entries series right before my CH3 adjusting entries & closing accounts exam and I got a 127 out of 130 points. These videos are so helpful, THANK YOU!!!

[@AccountingStuff]

Boom 👊 You smashed it! Congrats :)

[@harmeetgp]

This dude is why am going to pass Accounting 1! Cheers dude if I ever see you out imma buy you a beer or 2 hehe guess you could call it a liability on my side

[@AccountingStuff]

It's all you! Best of luck with it

[@kossiviamouzou7486]

Honestly you're among the best here on youtube. Contents are well organized, easy to understand, and with little bit of fun moments. Great work, looking forward to learning all the accounting stuff from you, even the advanced topics

[@AccountingStuff]

Thanks for your kind words :)

[@venomx77]

Just started my Accounting I class 4 June. I just wanted to say thank you. I had misconceptions about credit and debits, and your videos helped me a lot. Now whenever i don't understand the reading material, I come look to see if you have covered it first. Please keep up the great work, you are helping a lot of people.

[@AccountingStuff]

Hey, it's great to hear that you're finding these vids useful. Best of luck in Accounting I

[@warrioravi2168]

Thanks for this video! I'm getting close to an Associate's degree in Accounting, and this was a nice refresher on some of the basics.

[@drewgoebel64]

Thanks for the awesome videos on accounting stuff. It’s hard to find videos that aren’t dead boring and awful when it comes to accounting stuff so you definitely filled a void! I appreciate the help.

[@Lily-vy1yi]

I just found this channel and I'm in my last year of studying accounting. I thought maybe I might not graduate on time but these are way easier to understand and might save my future. Thank you.

[@Benjamin-ex9pd]

Dude thank you man

[@mohamedalshafie8741]

Really you are doing a great job my dear, well prepared and organized and videos design, its clear, there is a huge efforts behind, all the best for you and keep going😊

[@AccountingStuff]

Cheers Mohamed, glad to hear you're enjoying the vids. Plenty more to come!

[@HOMEFOODMANIACS]

So you are slowly entering into real accounting stuff Accounting cycle 🤘✌️

[@AccountingStuff]

Hey Munesh, yeah things are heating up here! Yes I'll get onto the accounting cycle at some point

[@muniiiii]

Accounting Stuff ok 😄

[@noahkatt7667]

this was much better than the 3 hour lecture with my prof.. wow hats down! thank you

[@andrewc6837]

I'm a bachelor's degree accounting student. Your videos are SO helpful. Thank you so Much!

[@AccountingStuff]

Cheers Andrew, hope your studies are going well!!

[@carlosmartinez-qr2ot]

Thank soooooo muuuuuch I love your videos. I’m a not kidding when I say that I learn more from 1 of your videos then a 3 hour lecture. My professor is a nice person but a horrible instructor please never stop making these.

[@AccountingStuff]

No worries Carlos. Sorry to hear that your professor isn't getting the message across. I don't plan on stopping any time soon!

[@carlosmartinez-qr2ot]

Accounting Stuff I’m actually about to buy the cheat sheet as I have an exam every week

[@AccountingStuff]

Hope it helps!

[@snowballecho1359]

Same !

[@Kermitsbgc]

i literally went from feeling absolutely fucked for my accounting exam next week to knowing what im about. SO wild

[@AccountingStuff]

Wooo! Good luck! I hope it goes well

[@JB-bm1to]

I'm gonna fist fight my instructor. His white background black text droning on and on makes it impossible for me to absorb information. He's too boring. No matter how hard I try! But your video has saved me from the impossible learning while bored ! ThisADHD girlie loves you! Thank you so much!

[@AccountingStuff]

Glad you enjoyed the video :)

[@TruleeBlest]

I appreciate your videos. You are a true educator, and you do it in a way someone like me can understand. I wish you were teaching my class. I'm not grasping much from the book. I'm glad I came across your videos. Thanks for sharing your gift.

[@deepikar1832]

I am a 19 year's old Indian doing my Us CMA and your videos are just awesome and soo much helpful to me, even I have recommend your channel to my friends, thanks a lot sir please keep on posting vidios.

[@GamerPLAYSYT222]

Deport

[@ghostfrom1950]

The simple analogies you use such as "Source" & "Destination" for dr. & cr. and "Buyer" & "Seller" for adjusting entries is top notch in book! makes working through accounting a thought process instead of a memory game! Thank you! @Accounting Stuff !

[@AccountingStuff]

Cheers Johnny, happy to hear that it's helping!

[@aphroditecrc]

I do a lot of training and teaching and have to say these are fantastic videos, you've made these difficult concepts much easier to understand. I even shared them with my client.

[@AccountingStuff]

Cheers George!

[@SeraphPatrick]

Bruv my exam is tomorrow XD damnnnnn

[@AccountingStuff]

Good luck Patrick!

[@SeraphPatrick]

@@AccountingStuff pretty sure I smashed it, your DEALER tip was huuuuuuuge honestly it made such a difference for guiding me especially when it came to adjustments, keep up the great work.

[@AccountingStuff]

Well done, that's awesome to hear!!!

[@heathervannote5783]

These videos have helped me SOOO much. I appreciate everything you do and how you explain accounting. You're are helping me keep my sanity!!

[@AccountingStuff]

No worries Heather! It's motivating to know that the vids are helping you out.

[@atharadel7608]

I just found your channel, you really save my time and a lot of this stuff make sense now. Thanks so much for shearing .

[@garethdwright91]

Hi James. I'm having some trouble with accruals. I understand the concept, and I understand how to do the double entry. What I don't understand is hkw they are different from the Receivables/Payables account. Let's say I sell a good on credit and don't receive payment before the close of the financial year, I provide the product to my buyer, the revenue has been earned, and I have recorded that transaction in the current financial period, as income in the SPL, and as an asset in the Receivables account in the SFP. I don't understand how this is any different from deferred income?

[@AccountingStuff]

Deferred Revenue is unearned Revenue. It's a liability because the business still needs to do the work e.g. provide the good or service to the customer. You can think of Accruals as estimates, the invoices haven't been raised yet so we need to record the transaction as best as we can. Once the invoice has been raised they can be logged properly in the accounts receivable / payable subledger.

[@jaidev777]

Remember "Accruals" and Deferred Revenue are two different things. Accrued Revenue = you provided the good/service, but the customer hasn't paid yet. Deferred Revenue = the customer has paid you in advance, but you haven't provided the good/service yet. The situation you are describing in which you sell a good on credit but haven't received payment yet, sounds like Accrued Revenue. But you are asking, what is the difference between Accrued Revenue and Accounts Receivables? As James says, it comes down to if the invoice has been raised yet or not. If not, then you post Accrued Revenue. If it is, then you post Accounts Receivable.

[@valeriecadotte1097]

Thanks, this helped a lot. I feel that text books makes things very complicated and hard to follow.

[@AccountingStuff]

Glad to hear it :)

[@comfortwalker4355]

pause video at 3.21 - you will found how much he loves accounting

[@NorvenAux]

I learn more in one of your videos than my teacher teaches me all semester lol

[@Lime6291]

I'm a new MBA student coming from a non-business background. Your channel is helping me so much get caught up!

[@AccountingStuff]

Thanks, that's great to hear. Best of luck with your MBA!

[@harvytorreverde790]

keep it up dude, u are helping a lot of people. ur content is timeless and as a result will be forever a a book to be passed on for generations and generations. Unless vast changes will be made on accounting policies years from now which i dont believe it wil affect your content relatively because accounting is just so raw to be a stable field. again, keeo it up dude. lot of people need you. cheers #420

[@AccountingStuff]

Cheers Harvy! Thanks for your kind words :)

[@mariateresamapue-corrales2796]

What kind of adjusting entries are depreciation expense , allowance for bad debts and merchandise inventory/cost of goods sold in a periodic system of inventory. How would you classify these adjusting entries.

[@By_MrShakhzod]

Thank you man it was quite understandable but could you make video with examples it will be more comprehensible thank you in advance

[@AccountingStuff]

The examples are in here... kzbin.info/aero/PL5zKSeS09l31dhHvwhS4sVjcckQSPGqtp

[@BrownStain_Silver]

I had to pause/replay this video several times to begin to grasp the concept. Very helpful video. Thank you!

[@anatudor340]

Thank you so much! During pandemic, while working from home & while my sweet little boy is sleeping, I need to be multitasking: working, cooking, learning and doing chores. It's so easy to understand from your videos and the fact that I don't have to be away from my son and still learning, it's such a big deal!! Thank you!

[@AccountingStuff]

No worries, hope it's all going well :)

[@JunemarFlores]

🤯🤓👌---->anticipating for ur next video of this adjusting entry series.

[@AccountingStuff]

It's coming soon!

[@jaimiechen7034]

Nice explanation. This video help me to clarify the concepts of prepayment and accruals.😃

[@MexicoTijuana741]

You are really good at explaining accounting. 👍🏻 Thanks!

[@AccountingStuff]

Thanks Eddie!

[@valepvh]

Thank you! Great video! I'm understanding it better now. I look forward to the other videos. I am mostly having trouble with the T-accounts and journal entries.

[@financialcounting5603]

Hi! If you're having trouble with T-accounts and journal entries, I could help explain them. Just let me know which part of those two topics you're having trouble with.

[@valepvh]

@@financialcounting5603 Thank you! It's doing the T account and journal entries for accruals and deferrals that I am having trouble doing.

[@financialcounting5603]

@@valepvh Not a problem! Let's say we have a deferred revenue adjusting entry to make, for example. Let's say on 1/1/2019, we sell a 2 -year magazine subscription and collect $1,000 up front. Since we did not perform the service yet, we have to initially record this as a liability account called deferred revenue. This entry would be a debit to cash for $1,000 (we obtain cash) and a credit to deferred revenue for $1,000 (the obligation to perform the service increased). Then let's say we make our adjusting entry on 12/31/19 (about 1 year later). We have performed 1 year of the service out of the 2 years that we promised. This journal entry would be a debit to deferred revenue for $500 (this decreases deferred revenue because we performed half of the $1,000 service which if $500) and we credit revenue for $500 (We increase our revenue because we performed half of the $1,000 service). I hope this helps. Please let me know if you have any question!

[@valepvh]

@@financialcounting5603 yes, that makes sense! Thank you so much!

[@ハン-u7k]

what is unrecorded receivable equals to?? and unrecorded liabilities we use different noun thanks !!

[@jaimiechen7034]

Thanks for the clarification. I always confused the difference between accrued revenue and deferred revenue.

[@adrianapacheco2808]

Hi there. I'm studying for AIPB Certification. Mastering correction of Errors Final Exam includes this question: "41. On April 1, 20X0, your company finances partial payment of the sale of machinery to a customer for a $20,000, 3-year, 8% note receivable. Interest is payable annually on April 1. On December 31, 20x0, an adjusting entry debits Interest Receivable and credits Interest Revenue for $1,600. The entry necessary to correct the error before the books are closed would include... a. a $400 debit to Interest Revenue b. a $400 credit to Interest Expense c. a $400 credit to Unearned Interest Receivable d. a $400 credit to Sales " All answers I've found online marked (a) as the correct answer, but I do not understand why? It should be ..Debit to Interest Revenue BUT for $1200. $20,000 * 8 % = $1,600 / 36 months (3 years) * 9 months (From Abril to December 20X0) = $400 ... That's the Interest Revenue earned in 20X0. Therefore if $1,600 was credited, $1,200 must be debited, to left $400 balance in credit. If I am wrong, please help me to understand the correct answer. Thank you very much in advance.

[@munsurmohammadarafatkhan3391]

Kindly include an example at the end of explaining for this vid. Ur vids are awesome

[@AccountingStuff]

Hey there, I have examples for each type of Adjusting Entry in this playlist → kzbin.info/aero/PL5zKSeS09l31dhHvwhS4sVjcckQSPGqtp

[@melodypharr7410]

To add to my comment, we prepaid for a music license, and now I've been told that we need to make an adjust to different accounts, (we use Oracle) the adjustment is 60/40, 60 for us and 40 for management company, how would that entry look? in my mind i'm thinking we have to take the originating account that the prepayment was made, back that out, and then post to our balance sheet 0000-130123 and then the management balance sheet 0000-121212, is this correct?

[@thanhnhannguyen35]

Hi, I am just wondering if most companies are using PREPAYMENT in all transactions via customers. For example, if I buy a stock in Amazon, I pay them money first and then they transfer that stock to me. I was confused with that. Is it correct? Thank you

[@erikadee8668]

Not on topic, but you are extremely handsome. It’s distracting 😅 I’m trying to start my own bookkeeping business so I’m binge watching your videos. Thank you for being so thorough.

[@susanmillard2128]

When accruing expenses how necessary to post job cost by each job --match one accurate liability versus each job...example 14 jobs divided by 359 invoices.

[@bxu4017]

What if as buyer , the company has received the goods or inventory purchased from seller, but hasn't received the invoice? What JE should we post? Thank you

[@auntrosa5240]

dude I want to watch your videos because I suck at accounting but I don't know if it's just your face or how you seem to painfully contort your face while speaking, or the subtle slivia noise your mouth makes between words, it's all just driving me insane to the point where I'd rather fail then listen any longer.. Just wanted you to be aware. thanks.

[@yurimarosorio833]

If I'm the buyer and I receive a Vendor bill with with a post date, what the best practice for entering this invoice? Should I just wait for the invoice date to approach? And if I receive a vendor bill with a date from the previous month (already closed) is it okay to enter in current period with the 1st day of the moth date?

[@shenelldavis5975]

Great video. Thank you.

[@AccountingStuff]

you're very welcome :)

[@andyc2730]

Hi I like your show, Would you mind to tell me whether Amount of Accounts Receivable on The Balance sheet is given gross (Including GST ) or withot

[@MuhamamdArslanKhan]

Starts From 2 : 05

[@rachaelonweekdays]

I don’t know what I’d do without this channel! I always come here after watching lectures

[@AccountingStuff]

Thanks Rachael! Hope your course is going well :)

[@zackd7597]

So if I incurred an expense in June but didn’t know the amount, made an accrual entry, and adjusted it in the following month, would this show an accurate amount for June?

[@cellomon09]

Ok so dumb question: how would you know to post an AP accrual for goods/services if you haven’t been invoiced for them yet?

[@dhanshreeoza3281]

Hi, Could you also share with Intercompany accounting V/S Intracompany accounting?

[@AccountingStuff]

Thanks for your request!

[@mosesebrothers6559]

Could you explain what amount of expenses or revenues from adjustments is to be used and when do we minus or plus expenses amount comparing from trial balance and adjusted amount....

[@monicayang1918]

This explains everything, however maybe it's just me but I find the facial expression a bit too distracting loll

[@pudding4431]

hello!! thank you so much for making this mini series, i have understood more by watching your videos than solely reading a book. do you have a video for a worksheet? if not would it be possible to make a video about it? thank you!!

[@AccountingStuff]

Thanks for your request! I don't at the moment but I'll keep the topic in mind for future vids

[@pandaonsteroids5154]

I like how you talk slow because I'm slow. Lol. I imagine it's better for people with a second language in English too!

[@AccountingStuff]

Thanks, cheers for your feedback!

[@NeelamSharma-bv1rk]

Sir you are teaching so good but please try to keep sober facial expressions, my attention is getting diverted to your face.

[@melodypharr7410]

SO i have an expense that was paid, and now I have to make an adjustment 60/40 how would the JE be entered?

[@thesniperbeast3125]

can you explain what prepaid income and accrued incomes are and how do we adjust them. exceptional vid btw.

[@catherineuzoma5927]

Thank you for these videos. Really very helpful!!!

[@AccountingStuff]

Cheers Catherine, you're welcome :)

[@luwampaulos1118]

Your videos are very clear. i am a great fun. thanks for sharing your knowledge and making our studying easier.

[@AccountingStuff]

Hey Luwam, great to hear you're enjoying them. I plan to release some more soon.

[@TaylorJohnson1]

I seriously see no benefit in buying books for Uni anymore.

[@japaneseotaku9090]

*I need this video please add automatic subtitles pleasssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssSSSSSSSSSsse* I NEED ARABIC TRANSIATION .. I NEED ARABIC TRANSIATION :(

[@Purple_pink14]

I'm so grateful you popped up on my Tik Tok account. Now I'm here following you on KZbin. Your explanations are helping me understand the foundations of accounting. Thank you!

[@AccountingStuff]

Great to hear you're finding these videos useful!

[@mwilamusonda578]

Your videos are so helpful, you are really a great tutor, keep it up..... Am getting ready for my exams and I feel confident all because of these videos 💃💃

[@AccountingStuff]

Thanks Mwila, glad you're finding the vids helpful. Good luck in your exams!!

[@jmd9402]

How do we accrue revenues in the past if accrual refers to receiving payments in the future?

[@samillagama1812]

What are your credentials to teach accounting stuff? Just wondering!

[@katiegjerde1785]

I'd love some help with reversing entries and an example of their application in a real life example. They were recommended to me as a solution for recognizing the revenue and COGS in the same month where we don't know what the exact amount of the COG is at the time the revenue is recognized. When we sell SaaS software, we invoice the client, receive payment, then order the SaaS (incurring the COG). So we have a challenge with our gross margins by month being all over the place because the sale and the COG are not always recognized in the same month. To solve this, the recommendation was to do a reversing entry at the end of the month to recognize what we're assuming will be the COGS with the balancing entry going to Accrued Expenses. Then on the first of the next month, it gets reversed back out. I'd love a real world example of this so I can understand better how it works and how it will affect my financial statements. Thanks!

[@AccountingStuff]

Thanks for your request!

[@ryangalloway9977]

Thank you so much for the series, you really should be bigger than you are. The way you explain this is much better than the droning older folks in other vids. Keep it up

[@AccountingStuff]

Cheers for your kind words!

[@usmaaan2154]

he is an accounting heath ledger

[@AccountingStuff]

I wish! RIP

[@johnrovicgerong433]

Thank you sir again for this very helpful video already crying because i cant get this on my head and you sir is a life savior this is easier to understand 😢 thank you sir

[@AccountingStuff]

No worries John, hope the video helped!

[@kristinadametto9725]

you have helped me soooo much! Because of strikes some teachers are making us learn some lessons on our owns so these videos have been really helpful for me!!!!

[@AccountingStuff]

No worries Kristina, I'm happy to help

[@shaikaamirsuhail9819]

Can u Plz try put a video on types errors and u r explanation is very good Bro 👌🤘🤘🤘👍

[@AccountingStuff]

Thanks mate!

[@MobilGamerX]

You have helped me more than my book I bought for $240!!!! College is taxing!

[@AccountingStuff]

Ouch, those textbooks are so expensive

[@isaaclaci7147]

Hello, First, I want to thank you for every single video. They are amazing. Secondly, would you happen to have any video on closing entries? I can see it has been quite a while since you haven't posted anything. It's a shame. 💯

[@AccountingStuff]

Here is the closing entries video: kzbin.info/www/bejne/m2LdY5-mmbasfbMsi=_U2Xkb7H1v7xJxhH

[@HanimpaGinuo]

Awesome!, well detailed explanation about the topic I tried to understand and now finally grasped the concept of the topic, Thank you so much for this meaningful and helpful video 🙏💯

[@AccountingStuff]

Thanks! Great to hear it's making sense :)

[@grace_mango6182]

Thank you for this entire series sir! It has been helpful in my understanding of adjustments in accounting more than any other video I've come across on the topic.

[@AccountingStuff]

Glad it was helpful!

[@syedm4657]

oh my god !!! where were you for these years man..... may God bless you for making us clear on this topic keep up your good work .

[@AccountingStuff]

Cheers! Will do :)

[@lioulmekuanint4424]

I don't understand how we adjust entries..pls explain it to me

[@paulhickey9003]

Another good presentation. But again with the word recognise is pronounced with the “G” = rec-og-nise. This silencing of G has come in to English by Italians, who’ve dropped the “g”.

[@AccountingStuff]

Thanks for pointing this out to me :)

[@samuelbond7156]

Hello, my company closes books the 15th every month. If I don’t have an invoice for the previous month can’t i just call the the vendor for the invoice prior to our close date of the 15, and then post it in the previous month. Therefore not needing to do an adjusting entry?

[@AccountingStuff]

Potentially but not all vendors would be flexible like that. If it doesn't come through on time you can accrue the expense

[@aliciaocampo4822]

hi james! what about unremitted vat? for example .. 4th qtr vat payable shld be paid n reported next year.. what will be the acctg entries? thank u!

[@AccountingStuff]

Thanks for your request!

[@mahfuzahmed971]

you slippery sun of a gun youre better than my damn lecturers

[@Miriam-jy7tgz]

Hello and thank you for your sharing, but do you have any videos with examples of prepaid Expenses please?

[@AccountingStuff]

Here you go: kzbin.info/www/bejne/iHaaqKWcoauCfaM

[@georgebrooking3820]

WHY THE FUCK IS THIS SO FUCKING HARD GOD FUCKING DAMMIT

[@clarencelimmingyi1680]

For, accrued expenses/revenue, why is the transaction recognised in the future income statement, when the transfer of goods and services happened in the past?

[@jaidev777]

James talks about the mistakes accountants make. In the case, accountants might mistakenly record expenses/revenue in the future (at time of invoice/payment) when it should have been in the past (goods/services were provided). So you are correct - the right thing would be to recognize revenue/expenses in the past income statement.

[@Saif_Hakami]

thank you sir for your efforts, this was pretty handy.

[@colleenforde733]

Thank you, I have been watching your channel for about six weeks now. It is very helpful. You deliver well.

[@AccountingStuff]

Cheers Colleen, glad you're enjoying the vids!

[@MultiSuperNelson]

I love the expenation, but would love the see example! Like for your to work on a problem, and we see how the number work

[@AccountingStuff]

I have a whole playlist with examples on each type of adjusting entry... kzbin.info/aero/PL5zKSeS09l31dhHvwhS4sVjcckQSPGqtp

[@tomatotatopotatotato4143]

does DEALER may apply in adjusting entries? appreciate your answer bro. thank you

[@AccountingStuff]

DEALER is ever-present

[@lexWest612]

Let's say I bought a number of CNC machines, laser engravers 3d printers ect.. Let's say I just started a business that will provide good from said machines. Am I aloud to just rent the machines I own to the LLC that I run?

[@ravattwal5531]

How do accruals work for VAT accounting?