How do i do this adjustment in Income statement / Balance sheet
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Accruals and other payables are to be considered at 30 days of the following operating expenses:
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Administrative & General Expenses,
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Sales & Marketing and
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Salary Compensation
Accruals are a type of accounting adjustment that are used to account for expenses that have been incurred but not yet paid or recorded in the books. To account for accruals, you would need to adjust both the Income Statement and the Balance Sheet.
To account for accruals in the Income Statement, you would need to increase the expenses by the amount of the accrual. For example, if you have an accrual of $1,000 for administrative expenses, you would increase the Administrative & General Expenses by $1,000 on the Income Statement.
To account for accruals in the Balance Sheet, you would need to create a liability account for the accrual. For example, if you have an accrual of $1,000 for administrative expenses, you would create a liability account called “Accrued Administrative Expenses” with a balance of $1,000 on the Balance Sheet.
At the end of the following month, when the expense is paid, you would reverse the accrual entry by decreasing the liability account and decreasing the expense account by the same amount. It is important to accurately record accruals in order to properly reflect the financial position of the company and to ensure accurate financial reporting.
Or expenses that have been paid but not yet incurred, or revenues that have been earned but not yet received, or revenues that have been received but not yet earned.