Question

Four types of adjustments are described in the chapter: (1) prepaid expenses, (2) unearned revenues,

(3) accrued expenses, and (4) accrued revenues.

Required

1. Formlearning teamsof four (or more) members. Each team member must select one of the four adjustments

as an area of expertise (each team must have at least one expert in each area).

2. Formexpert teamsfrom the individuals who have selected the same area of expertise. Expert teams

are to discuss and write a report that each expert will present to his or her learning team addressing the

following:

a. Description of the adjustment and why it’s necessary.

b. Example of a transaction or event, with dates and amounts, that requires adjustment.

c. Adjusting entry(ies) for the example in requirementb.

d. Status of the affected account(s) before and after the adjustment in requirementc.

e. Effects on financial statements of not making the adjustment.

3. Each expert should return to his or her learning team. In rotation, each member should present his or

her expert team’s report to the learning team. Team discussion is encouraged.

Short answer

Answer:

Adjustment entries are passed on, recording those transactions that are unrecognized.

Step-by-step solution

Step 1:Definition of adjustment entry

It is the entry that updates the balance of all accounts.

Importance of adjustment entries

Adjustment is necessary for updating the balance of all accounts before preparing the financial statements. The adjustment entries tell about the accuracy of the accounts that are prepared by the company. At the end of the year, some income and expense accounts are not uptaded to update these accounts the adjusting entries are prepared. The adjusting entry changes the amount of the journal entries that are already made by the company to record the correct amount at the end of the year.