Question

for each situation, indicate which category of adjustment (deferral or accrual) is described. 7.journalize the adjusting entry needed.

Answer 1

Adjusting entries in accounting include deferral and accrual adjustments.

Step-by-step explanation:

In accounting, adjusting entries are made to record transactions that have occurred but have not yet been recorded. There are two categories of adjustments: deferral and accrual.

Deferral:

A deferral adjustment is made when cash is received or paid before a revenue or expense is recognized.

For example, if a company receives a cash payment from a customer in advance for services that will be provided in the future, a deferral adjustment is made to recognize the revenue when the service is actually provided.

Accrual:

An accrual adjustment is made when revenue has been earned or an expense has been incurred, but cash has not yet been received or paid.

For example, at the end of the accounting period, a company may have provided services to a customer but has not yet received payment. An accrual adjustment is made to recognize the revenue even though cash has not been received.