All documentation and adjusting entries
should be prepared at the time of the loan.
Two of the most commonly difficult subjects are the financial statements and their accounts and the introduction of accrual basis accounting and adjusting entries
. "Financial Statement Bingo" and "What's The Adjusting Entry?" are games created to reinforce these rudimentary topics and to target those students who struggle to understand the basic textbook information concerning these topics.
Notice that the adjusting entries
for unrealized profit (Year 1) and realized profit (Year 2) in Panel A of Exhibit 4 are identical to the adjusting entries
for unrealized and realized profit in Panel A of Exhibit 2, except for the amounts.
are the final step in accrual accounting.
If proposed audit adjustments should be subjected to the same standards as nonattest services, then the third situation described above requires the auditor to consider whether independence is impaired and to address the issue every year when preparing material audit adjusting entries
that are submitted to the client.
However, at year end, when preparing the trial balance along with the closing and adjusting entries
, an accountant may discover other errors.
The introductory course should do one thing: teach the basic foundation of accounting, also known as bookkeeping, and then go a little past that to incorporate adjusting entries
, and other topics.
In addition, students discuss in class how they will present the adjusting entries
and the resulting financial statements to Hydromaint's owners/engineers and bookkeeper and are continually reminded of their responsibility to various users of financial information such as investors, creditors and suppliers.
Some of the new or expanded steps will include determining how the client prevents, deters, and detects fraud; increasing independent verification, physical observations, and sample sizes; making unannounced visits and surprise tests; performing a detailed review of closing entries and increasing reviews of end-of-period adjusting entries
The case study's staff accountant was too concerned with adjusting entries
and not concerned enough about the apparent indication of fraud.