A company receiving the cash for benefits yet to be delivered will have to record the amount in an unearned revenue liability account.
Assume a magazine publishing company charges an annual subscription fee of $12.
Expenses for interest, taxes, rent, and salaries are commonly accrued for reporting purposes.
A third classification of adjusting entry occurs where the exact amount of an expense cannot easily be determined.
In a periodic inventory system, an adjusting entry is used to determine the cost of goods sold expense.