This also relates to the matching principle where the assets are used during the year and written off after they are used. Thus, it is recorded at the end of the year. For example, depreciation is usually calculated on an annual basis. These expenses are often recorded at the end of period because they are usually calculated on a period basis. Non-cash expenses – Adjusting journal entries are also used to record paper expenses like depreciation, amortization, and depletion. In this sense, the expense is accrued or shown as a liability in December until it is paid. Since the expense was incurred in December, it must be recorded in December regardless of whether it was paid or not. December’s electric bill is always due in January. In this sense, the company owes the customers a good or service and must record the liability in the current period until the goods or services are provided.Īccrued expenses and accrued revenues – Many times companies will incur expenses but won’t have to pay for them until the next month. Unearned revenues are also recorded because these consist of income received from customers, but no goods or services have been provided to them. Only expenses that are incurred are recorded, the rest are booked as prepaid expenses. The same is true at the end of an accounting period. This transaction is recorded as a prepayment until the expenses are incurred. This means the company pays for the insurance but doesn’t actually get the full benefit of the insurance contract until the end of the six-month period. Insurance is usually prepaid at least six months. Insurance is a good example of a prepaid expense. Prepaid expenses or unearned revenues – Prepaid expenses are goods or services that have been paid for by a company but have not been consumed yet. Here are the main financial transactions that adjusting journal entries are used to record at the end of a period. (It peaked at #2 in the week of September 4, 1965, blocked from the #1 spot by the Beatles’ “Help.Why are Adjusting Entries Necessary? What Does an Adjusting Journal Entry Record? Two well-known radio DJs in the audience heard “Like A Rolling Stone” and the overwhelming crowd reaction to it that night and called Columbia the next day, demanding their copies of “the new Bob Dylan single.” Sales and marketing got its last dig in by chopping “Like A Rolling Stone” in half and putting it on separate sides of 45, but a re-spliced full version was what radio stations played and what climbed very nearly to the top of the Billboard pop charts. As Shaun Considine, the coordinator of new releases for Columbia Records at the time, recounted 40 year later in a New York Times Op-ed, Dylan’s magnum opus was rejected as a single and resurrected only after Considine slipped a studio acetate to a DJ at a prominent Manhattan nightclub in mid-July. At 6:34, “Like A Rolling Stone” was nearly twice as long as the average single, and its raw rock sound was way outside the comfort zone of a label best known for artists like Andy Williams and Johnny Mathis. Returning to the CBS studios to hear “Like A Rolling Stone” several days after the recording session, Dylan and manager Albert Grossman were thrilled by what they heard, but the sales and marketing staff of Columbia Records-the gatekeepers who decided what songs would and wouldn’t be released as singles-did not agree. It was the fourth of 11 takes that day that yielded the six-minute-and-34-second recording that very nearly didn’t become a revolutionary hit single.
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