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4b4e38a4-1395-415d-94fd-3fc7bb2ec59f - Lecture & Workshop 3 RFCC.mp4

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    LECTURER: Ok, hello everyone.
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    Welcome again to the Accounting
    and Governance class.
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    Could anyone please tell me
    if the volume is ok?
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    Perfect. Ok, thank you.
    Thank you.
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    Still, I hope you have had
    a very good week,
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    and I hope that you will do well
    in your first accessible homework
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    that is in the process of marking
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    by another lecturer,
    that is the person who will mark
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    all our assessment.
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    So just be a bit patient,
    during this week we will release
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    the results of the first
    accessible homework.
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    Now today we will continue
    with what we started last week.
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    Last week what you learnt
    was how to record transaction
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    using debits and credits
    and preparing the journal entries
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    and you know that for
    each journal entry
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    you need at least one debit entry
    and one credit entry.
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    it could be more than two,
    but normally we have one debit
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    and of course the total debit
    and total credit should be the same,
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    the same amount in each journal entry.
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    So what we will go through today
    another type of entries
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    which is adjusting entries.
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    I hope you have studied the
    material that is posted
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    on the course learning agreement,
    you have watched the videos
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    and looked at the PowerPoint too
    and have of course understanding of this.
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    But as usual I will explain everything
    you need to understand well,
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    how to deal with these
    different types of entries
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    that are the adjusting entries.
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    The purpose of this session
    is that you will end the session
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    with a clear understanding of that,
    adjusting entries and also closing entries
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    which is another type of entry.
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    The journal entries that you
    learnt last week
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    are entries that you prepare from
    transactions that you have in the business
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    so when the accountant
    records these transactions
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    the accountant receives information
    that is mainly through the cash received
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    and cash paid so they are
    very based on the cash.
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    Cash received and cash paid.
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    I will answer that they...
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    They are mainly related to
    cash received and cash paid
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    but sometimes the accountant also receives
    information of invoices
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    that are sent to customers so they record
    an income or revenue and purchases
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    so they record the purchase as well.
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    So not all are cash journal entries
    but most of the I would say yes.
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    The first difference in adjusting entries
    is in adjusting entries,
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    we do not involve cash.
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    Cash is never involved
    in an adjusting entry.
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    So what are these adjusting entries?
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    And in this I will answer what they do.
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    Why adjustments are not done each month
    as a normal activity
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    then it will not be such a big adjustment
    and you are totally correct here.
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    But that depends...
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    it depends on what is
    our accounting period.
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    It depends on the company.
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    The normal accounting period
    is one year.
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    If a company does not prepare
    financial statements every month
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    for example, or every quarter,
    well, it will happen what you said.
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    The adjusting entries are
    at the end of the year.
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    But what's happening there
    in the real world
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    companies prepare the financial statement
    every quarter or even every month
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    and in that case if we define the
    accounting period as one month
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    that means at the end of the month
    we need to prepare the adjusting entries.
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    The concept of adjusting entries is that
    we prepare adjusting entries
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    at the end of the accounting period,
    ok?
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    That is the thing.
    At the end of the accounting period.
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    If the accounting period is one month
    we prepare adjusting entries
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    at the end of the month.
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    If the accounting period is the whole year
    we prepare the accounting entries
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    at the end of the year, ok?
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    That is one concept that we need to
    have in relation to adjusting entries.
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    The other thing is what we are adjusting
    because the name is adjusting, ain't it?
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    What we are adjusting with these entries.
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    We adjust revenues or income
    and expenses.
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    That is what we adjust to reflect
    in the financial statements,
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    all the income or revenue
    that has earned in the period,
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    and to reflect all the expenses
    that have been incurred during the period.
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    That is what we show with
    the adjustment entries.
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    That's why we cannot do adjustment entries
    in the middle of the month
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    or at the beginning of the month,
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    it's always at the end of the period
    because at the end of the period
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    we want to have in our financial statement
    all the income earned in that period
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    and all the expenses incurred
    in that period.
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    So this is the most important concept
    to start with adjusting entries.
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    Then as I said some expenses
    and revenue menu can be recorded exactly,
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    that's the things, others,
    some expenses revenues cannot be recorded
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    we need to adjust to have
    all the expenses incurred recorded
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    and the same for income or revenue.
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    To align with the business
    activity statement,
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    the business activity statement
    is the tax concept.
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    In many cases the tax period is the same
    as the accounting period
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    in that case a year but we need
    to be careful that we do not mix
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    with the tax concept when we
    are talking with accounting
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    because there may be some differences.
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    Ok, so we will start as usual today
    with the lecture in which I will pose
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    four multiple choice questions.
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    You will answer the questions,
    and this will be a good feedback
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    for you and for me about
    the understanding of some basic concepts
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    of this topic.
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    If I see that the distribution of
    your answer is not very good
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    which is a very good feedback
    in the sense that that lets me explain
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    why this answer is correct
    or why it's not correct
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    for your own learning.
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    We will discuss that and I will use
    these questions to explain
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    probably some of the concepts
    if they are not clear.
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    So please feel free as usual to ask
    any question during the lecture
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    and then during the workshop.
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    Last week we talked for more than
    four and a half hours
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    in the whole thing because
    of the number of questions
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    but probably today we will be less than
    that because the topic is more specific
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    but I am happy to answer all the questions
    to explain well,
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    the main purpose is for you
    to understand these topics.
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    That is the main purpose of this topic
    because then
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    you will be evaluated on this topic.
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    The second assessable homework
    will be next week
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    after the topic four,
    module four.
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    So that assessable homework two
    includes this module,
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    module three,
    adjusting and closing entries
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    and also the module four.
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    That's why it's very important,
    if there is anything you do not understand
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    please ask, ok?
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    I hope no **
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    ** I hope you will not be
    four and a half hours.
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    Ok, for me it's ok.
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    I have enough energy to be
    four and a half hours.
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    I feel sorry for you sometimes
    after you're very tired after that time
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    but we will do the best we can.
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    Ok, so we will start with
    the questions here.
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    Here we have the first question.
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    Have a look.
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    The question is when is the $1000
    considered to be n?
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    So it's about the day when this
    is considered to be n.
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    Look at all the dates that you have there
    and you can vote for your answer.
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    When they are n.
    Take your time.
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    Pima can't see properly, ok.
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    Pima, you can zoom,
    I will put a bit bigger.
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    Maybe that can be...
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    Ok, good.
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    Ok. Uhm, ok.
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    What is the answer?
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    We have a distribution of answers
    in the poll
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    so it's good to explain a bit.
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    That is the feedback I need,
    so if that other whole distribution
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    of your answers means, yeah.
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    I need to explain how can we determined
    when the $1000 are n.
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    Most of you actually answered correctly
    but there are of course,
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    there are many different answers.
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    So this question is about when revenue
    is n, ok?
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    That is the question,
    we are using accrual accounting.
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    In accrual accounting revenue is recorded
    when it is n,
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    not when cash is received,
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    and expenses when they are incurred
    not when they are paid, ok?
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    So we need to identify from the dates
    when these $1000 are n.
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    The day the manufacturer received a
    purchase order for 10 dresses
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    for a total price of $1000,
    15th November.
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    On 15th November the manufacturer
    received the order, nothing happened,
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    so the revenue is not earned, ok?
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    The 10 dresses were delivered
    on 30th November.
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    Delivered means that revenue is earned.
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    When is revenue earned?
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    When the products are delivered
    to the customer.
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    They are passed from the company
    to the customer.
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    At that point, revenue is earned.
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    In the case of services,
    it's when services are provided.
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    When the service is provided,
    service revenue is earned.
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    So that is the correct answer, ok?
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    There is some echo,
    probably someone has the microphone on.
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    So this is the correct answer,
    and the other dates,
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    the customer is sent an invoice
    on 5th December.
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    No, the producer already delivered it,
    doesn't matter that the invoice was sent
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    after the delivery of the produce.
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    The payment of the check is received
    10th December.
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    Again, it's not related with when we
    receive the payment
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    or when we bank the payment.
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    So, the correct answer is that.
    any questions?
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    What is the answer?
    I thought....
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    I put here, can you see the blue...
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    I wrote in the screen,
    the blue circle.
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    It doesn't save.
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    30th November, that is the correct answer.
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    I'm not sure if...
    Can you see because I drew a blue circle
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    Can you see them?
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    Ah, it's not a line.
    Double is in the white space.
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    Ah, I didn't know that. Ok.
    Ok, interesting.
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    In my screen it's exactly in see
    but probably there are differences in this
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    Probably just zoom each,
    probably.
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    I move my zoom in and out
    and the circle is in see, that's the mode.
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    Ok, we go to the next one.
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    If a resource has been consumed
    but an invoice has not been received
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    at the end of the accounting period,
    which of this is correct?
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    I will update...
    It doesn't move the page.
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    Ok, if you cannot follow this
    I can change to...
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    Yes, I will reset the board.
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    Ok, so if a resource has been consumed
    but an invoice has not been received
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    at the end of the accounting period,
    what is the situation?
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    We have some different answers
    but most of you are correct.
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    The correct answer is B.
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    Ok, B, an adjusting entry should be
    recorded to recognize the expense.
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    Why is this?
    Because the resource has been consumed.
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    When expenses are incurred is when
    the resources are used or consumed.
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    That means that need to record
    an expense, ok?
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    So in this case the only one,
    and adjusting entry should be recorded
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    to recognize the expense.
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    Any question on this?
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    Is it clear?
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    Ok, we will go to the next one,
    thank you Jay.
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    Number three, if an entity fails to adjust
    the prepaid rent account
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    for rent that has expired,
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    what effect will this have on the
    monthly financial statement?
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    Here you need to thing a bit more
    because it's what's happening,
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    the adjusting entry was not recorded,
    what would be the effect on that?
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    I will update the poll.
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    The previous answer was B.
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Title:
4b4e38a4-1395-415d-94fd-3fc7bb2ec59f - Lecture & Workshop 3 RFCC.mp4
Video Language:
English
Duration:
03:50:26

English subtitles

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