This document defines and provides examples of different types of adjustments including deferred expenses, deferred revenues, accrued liabilities, and accrued assets. Deferred expenses and revenues relate to cash received before the associated expense is incurred or revenue is earned. Accrued liabilities and assets relate to expenses incurred or revenues earned before cash is paid or received. Specific examples provided include supplies, prepaid rent, unearned subscriptions, wages payable, interest payable, rent receivable, and interest receivable.

1. Adjustments Summary
Examples:
 Deferred Expense
cash received before expense is incurred
 Deferred Revenue
cash received before revenue is earned
 Accrued Liability
expense incurred before cash is paid
 Accrued Asset
revenue is earned before cash is received

2. Deferred Expenses
Examples:
 Supplies
Supplies Expense increased by the
amount of supplies used; Supplies decreased
by same amount
 Prepaid Rent/Insurance
Rent Expense increased by amount used
up; Prepaid Rent (asset) decreased by same
Exercises 4-5, 4-6

3. Deferred Revenues
Examples:
 Unearned Subscriptions
Unearned Sales (Gift Cards)
The amount “earned” is moved from the
liability (Unearned Revenue) to Revenue
(Increases Income)
Exercises 4-12, 4-13

4. Accrued Liability
Examples:
 Wages Payable
Wages Expense increased by the amount
of wages earned by employees but not paid.
Wages Payable increased by same amount
 Interest Payable
Interest Expense increased by amount
incurred; Int. Payable (liability) increased by
same Exercises 4-15, 4-16

5. Simple Interest Formula
I=P*R*T
P = Principal
R = Rate
T = Time

6. Accrued Asset
Examples:
 Rent Receivable
Rent Revenue increased by the amount
of rent earned but not yet received. Rent
Receivable (asset) increased by same amount
 Interest Receivable
Interest Revenue increased by amount
earned; Int. Receivable (asset) increased by
same Exercises 4-20, 4-21