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Adjusting Entries

Adjusting Entries

Q Give an example of an adjusting entry and why is it necessary to do adjusting entries?

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In adjusting entry there are two main types, the first is Deferrals which is anything that deals with prepaid expenses as well as unearned revenues. To go into a little more detail prepaid expenses is anything that is paid in advance, those things can be rent, insurance supplies, or something with a depreciation expense.