If i have paid for something why cant i expense the entire amount on the income statement?why do we need to make an adjustment to the insurance policy at the end of the year? wouldn't it have easier to record the entire balance as an expense in November when the policy was ?purchased?why do I need to take an inventory count of my supplies at the end of the year?If I receive the Hydro bill on August 5th, why don't we record the transaction for the next fiscal period rather then include it in the July 31st, 2006 fiscal year end?

lvmWHAT

 Profile Answers by lvmWHAT 

• May 29th, 2008

 

i'm pretty sure, nick, you cant expense the ENTIRE AMOUNT on the income statement because HELLO DEPRECIATION.  and what is depreciation might you ask? well depreciation means that the lovely items you buy, you can't sell for the same price. like when you leave the parking lot with a new car the price drops like 10.000 dollars. cause no idiot wants to buy a car from a person who had it for a week. HELLO thats calling MAJOR LEMONED CAARRR.

also,
uh. because your insurance policy doesn't END untill the year's done? and what if you don't use your incurance policy? and you don't PAY UNTILL THE YEARS DONE duh. adjusting entries to increase Expenses are required either because you already paid for them before using them (prepaid expenses such as insurance, rent, Supplies) or you used them before being billed or paying for them (Accrued Wages Payable, Accrued Interest Payable, etc.). This tells you your Credit entry if the adjustment is to increase an Expense. Debit the Expense; Credit Prepaid Insurance, Supplies or Wages Payable, etc. learn it use it suck it bud

and who gives a crap about your hydro bill. KIIIDDDDIINNNGG.  because you've gotta pay your billz nick, you gotta pay your billzz