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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 assessable 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
    assessable 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 Jade (INAUDIBLE)
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    Jade 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 Jade.
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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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    It is prepaid rent failed to adjust
    for the month that was paid.
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    This is the prepaid rent that was recorded
    as a prepaid rent
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    but now in this month the rent has expired
    so it was used,
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    the office or the building
    that we are renting was used, yeah.
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    You see in my poll you still chose
    number one, is it correct?
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    Ah, yes, yes.
    I didn't change the numbers,
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    I just updated the poll solutions,
    but I didn't change the number.
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    This is for the questions, for each
    question I update the poll,
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    I do not change the number because that
    takes a bit more time
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    to change that number
    so I just update the answers
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    to lead them in zero,
    you come out again for each question.
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    Ok, so we have a distribution of answers
    and now there is a whole distribution
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    of the answers,
    so I think this is important to explain.
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    If an entity fails to adjust
    a prepaid rent account
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    that means we have a prepaid rent account
    we pay in advance the rent of the office,
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    we'll assume that this is the rent
    of the office.
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    We pay in advance the rent of the office
    before we use the office, we pay.
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    How do we record that?
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    We record that as a prepayment
    which is an asset, we debit that,
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    and we credit cash.
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    So we debit prepayment,
    we credit cash.
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    That was the original entry.
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    Now at the end of this period,
    it says that the rent has expired
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    so we used the office for this period
    so that is what we need to adjust.
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    We need to credit the prepaid rent
    for the amount of the rent that expired
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    we need to credit prepaid rent
    and we need to credit the expense.
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    What happens if we do not do this?
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    I will write in the same paper
    what this means,
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    so we will...
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    when we do the adjustment
    we will increase, ok, the expenses,
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    we increase expenses,
    that is one of the entries,
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    we debit rent expense
    and we will decrease the prepaid rent,
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    the prepayment, ok?
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    I will adjust the prepayment,
    pre.
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    This is the prepaid rent
    which is an asset.
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    What effect will this have
    on the month financial statement
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    if we do not record this?
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    If we do not do this,
    what is the effect?
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    What happened with the expenses?
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    Expenses will be understated
    because we didn't record this.
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    What happens we will have in assets,
    assets will be overstated.
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    So to find the right answer here
    you need to look at all the answers.
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    What answers we had that assets
    are overstated? Only D and E.
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    In C, well...
    Sorry, C, D and E.
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    In A it doesn't say anything about assets
    B, nothing about assets,
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    so only C, D and E assets
    will be overstated.
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    That is one thing because of this,
    because we didn't decrease the prepayment
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    which is an asset.
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    Assets will be overstated.
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    How will we know which one is correct?
    C, D or E?
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    We need to look at those expenses
    will be understated,
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    but we don't have this,
    C, D and E talk about profits.
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    Then you need to relate profit
    with expenses.
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    If expenses are understated,
    what happens with profits?
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    Profit will be overstated, ok?
    Profit will be overstated.
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    That's why E will be incorrect also.
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    Is that clear that, very well?
    Profit increases?
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    So we need to relate this,
    you can see now we are using
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    all the elements that you had
    planned before, ok?
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    Profit equals revenues plus expenses.
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    These expenses are understated,
    profit is overstated.
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    Any question?
    Ok.
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    Yes, (INAUDIBLE)
    I need to add one thing.
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    Profit will be overstated and that is
    the answer for question D and E.
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    What is the difference between D and E?
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    Equity will be understated,
    in E equity will be overstated.
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    So now we need to relate
    the profit with equity.
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    So when profit is overstated,
    equity is overstated.
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    If profit is understated,
    Equity is understated.
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    So what is correct?
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    Asset overstated, profit and equity
    would be overstated.
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    Ok, that answer your question Jade?
    Good.
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    Ok, so we will go through the last one.
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    Here you have the last one
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    On 1st September Carlson Limited borrowed
    $10,000 from the bank for three months
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    at the annual interest rate of 9%.
    Annual interest rate 9%.
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    Principal and interest are payable
    to the bank on 1st December,
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    so this is for three months long.
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    If the company prepares monthly
    financial statements
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    the adjusting entry that the company
    should make for interest on 30th September
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    that means after one month would be
    which of these ones?
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    I will update the poll.
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    Ok. So how we determine this,
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    we need to look at what is the interest
    for one month
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    because the expense incurred in this case
    the interest expense,
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    is the interest that...
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    that is the interest for only one month.
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    We are preparing the adjusting entry
    at 30th of September.
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    The loan started on 1st September
    so it's the interest for one month.
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    This will clarify the answer for if you
    calculate the interest for the year.
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    Annual interest rate is 9%,
    for one month it will be 9% divided by 12
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    that is the interest per month,
    and then you multiply by $10000
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    to calculate what is the interest
    per month which is $75.
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    So at the end of September
    we need to record,
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    interest expense $75,
    and credit interest payable
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    because it will not be paid until
    1st December.
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    So we debit internet expense
    we credit interest payable, $75,
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    the correct answer is D, ok?
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    Ok at that?
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    When we have a loan
    we need to pay interest.
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    What is that interest?
    It's an expense.
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    The expense incurred because
    we borrowed money.
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    And we can calculate based on
    the interest rate.
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    The interest rate is always given
    and always is given annually,
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    so what is the annual interest rate?
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    In this case it is 9%,
    you can see here.
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    9% is the interest rate,
    but this is the interest rate
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    for 12 months, ok?
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    So to calculate, very well Joshua,
    to calculate by months we need
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    to multiply the 9% by 112,
    or simply divide it by 12, ok?
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    And then you will have what is
    the interest per month
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    because between the 1st of September
    and 30th September
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    we need to prepare the adjusting entries.
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    The adjusting entry is one month,
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    so the interest expense will be
    the interest for only one month, ok?
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    So very good.
    Good at that, and that is $75.
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    Ok, so we've finished
    the multiple choice questions,
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    do you have any questions about concept
    because now we will apply the concept
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    in exercise about adjusting entries,
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    so any question about concepts that
    you would like to ask at this point?
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    All good?
    Ok.
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    So, we will go...
    Excellent Ruby, thank you.
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    Yes, yeah, we will go through
    the practice questions now.
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    And I will start briefly with a very
    brief review of what you have learnt
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    about adjusting entries.
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    It is only three months,
    just another.
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    It's only three months long because
    it starts on 1st September
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    and is payable on 1st December.
    The interest and the principal both.
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    So you pay back the $10000 on 1st December
    with all the interest of the three months.
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    Ok, no we will talk a bit about
    adjusting entries.
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    I will explain using this diagram
    that you have in your PowerPoint
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    and you have seen in your videos,
    I will not go into whole detail of course
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    but just with this...
    this is the big summary.
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    The big summary of adjusting entries.
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    We have two types of adjusting entries
    or would say four types
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    if we combine revenues and expenses.
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    But we have the accruals
    and we have the prepayments, ok?
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    They are two different adjustments.
    What means accrual?
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    Accrual when talking about revenue
    means receivable, ok?
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    Accrued revenue it will be the same as
    to say revenue receivable.
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    Accrued expenses when you see this term,
    accrued expenses,
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    that means expenses payable, ok?
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    So accruals means receivable or payable
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    depending on whether it's revenues
    or expenses.
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    And then we have the prepayments.
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    Prepayments means payments in advance,
    ok?
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    We can receive a payment in advance
    and that is what we call earned revenue
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    or revenue received in advance, ok?
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    It's the payment received in advance, ok?
    That is payment in advance.
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    Or we can pay in advance and that is
    what we call prepayments.
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    So these adjustments,
    and these are all the adjustments,
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    there are no other adjustments for
    timing differences.
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    There are adjustments to correct errors,
    we will not go there,
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    we are talking about the timing difference
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    that means to record revenues
    when they are earned,
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    expenses when they are incurred.
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    All the purpose of adjusting entries
    is that,
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    to record the revenues
    in the accounting period
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    that are earned in that accounting period
    and to record expenses that are incurred
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    in that accounting period.
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    From the normal transactions that
    you learnt last week,
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    we may have many cases in which revenue
    was not recorded,
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    expenses was not recognized as well,
    and we need to adjust them
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    because the main purpose
    of the financial statements
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    in particular the income statement
    is to show the revenues
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    earned in that period,
    in the period of the income statement
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    and to show the expenses incurred
    in the same period.
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    So that is the purpose
    of adjusting entries,
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    to reflect revenues earned and expenses
    incurred in the accounting period.
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    So this is the big summary.
    Now how do we deal with this?
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    Well, in the case of prepayments
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    we have different accounts that can
    be considered as a prepayment.
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    One is the prepaid expenses like
    prepaid insurance, prepaid rent,
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    but there are others that we can give
    the same treatment of this prepayment
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    which is supplies or depreciations.
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    That means the payments that
    the company makes in advance
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    and therefore they are considered
    as prepayments.
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    So what are the terms involved
    in this prepaid expenses?
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    Well, we have an asset that has an
    unadjusted balance.
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    For example, we have prepaid insurance.
    That is an account of asset.
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    And we do not adjust this because we pay
    for that at the beginning of the t,
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    ok, 1st of January for example,
    and then on the 30th June we are halfway
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    of the total period provided by the policy.
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    The policy normally,
    the insurance policy covers 12 months.
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    So we are using the policy
    during 12 months.
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    But what's happening in June?
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    Well, we do not have the same amount
    in assets because we already consumed
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    half of the policy, six months,
    so half of the policy has been consumed.
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    Then we need to adjust the amount
    in assets.
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    Here you had the unadusted balance
    of the asset,
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    that is the total amount of the policy,
    we need to adjust that.
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    How do we adjust that?
    We need to record an expense.
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    An expense for the six month use
    of the policy.
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    So we will record debit expense,
    that is the adjusting entry,
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    we debit the expense,
    and we decrease the asset
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    that means we credit
    the prepaid insurance.
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    So you can see here,
    this is your adjusting entry.
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    We have a debit entry,
    we have a credit entry.
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    We debit insurance expense,
    we credit prepaid insurance.
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    So this is one case.
    And the same we will use for prepaid rent,
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    for supplies, for depreciation, ok?
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    Jade hit the question.
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    Oh good, excellent Jade.
    That's my purpose,
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    to explain in detail what it means,
    this thing.
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    Is there anybody that might have
    a question on this?
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    We will go through the four
    that are adjusting entries.
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    This is related to the prepaid expenses.
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    Ok, we go through the second one.
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    The second one is what we call
    the un-earned revenues.
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    So revenues received in advance,
    what is the concept?
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    Imagine that the company has a building,
    and they are renting offices
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    from this building so they have a
    number of clients that rent offices.
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    And they ask the tenants to pay in advance
    before they start using the building,
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    they have to pay for example
    three months in advance.
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    So the company received the cash
    for this,
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    but the tenant still is not using
    the office,
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    so how will we record this first entry?
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    This is the entry that you learnt
    last week, this is a normal transaction.
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    The company receives cash
    so we will debit cash, ok?
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    And we will have this unearned revenue
    or rent revenue received in advance
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    which is a liability for that amount.
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    Why is this a liability?
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    Because at this point the company
    has not provided yet
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    the office for the tenant to use, ok?
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    The tenant has not used the office yet,
    they pay in advance.
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    So we have a liability because we have
    an obligation to provide the office,
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    the tenant already paid.
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    Now, what happens after one month?
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    We are doing financial statements
    every month.
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    We need to prepare an adjusting entry
    because we already provided this service
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    to the tenant,
    we already provided the office,
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    the tenant used this resource
    already one month,
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    so we need to adjust
    our liability accounts.
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    So the liability account has
    an adjusted balance, ok?
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    When the tenant pays in advance,
    and now after one month
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    we need to reduce this for the month
    the office was already used.
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    So we will debit this liability
    that is part of the adjusting entry,
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    and we will credit revenue because now
    we earn this revenue,
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    that is the rent revenue.
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    We earn that because we already provided
    one month of the office to the tenant.
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    So here you have again,
    the adjusting entry.
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    We have one debit entry,
    the rent revenue received in advance,
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    a debit entry,
    and we will have a credit entry
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    which is simply rent revenue.
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    Any question on this second one?
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    We will practice with many exercises today
    for you to have a very,
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    very clear understanding
    of the adjusting entries.
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    Ok, the last two.
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    The last two I would say they are simple
    adjusting entries.
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    We have accrued revenues.
    As I mentioned before,
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    accrued revenues means
    revenues receivable.
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    This is the case when the company
    sells products or provides services
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    but we still do not record that sale
    and we have not received the cash yet,
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    but the service is provided
    or the products are delivered
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    so we need to record revenue.
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    If we have not recorded this
    in the normal journal entry...
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    Journal entry that you learnt last week,
    we will need to record that revenue.
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    Since revenue or savings revenue,
    or we credit this.
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    What will be the other accounting ball?
    It will be the receivable.
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    An accounts receivable which is an asset
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    so here you have debit
    the accounts receivable
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    credit service revenue
    or service revenue,
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    depending on whether we are
    selling produce or providing services.
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    So that is the third adjusting entry
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    and the last adjusting entry
    is accrued expenses.
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    That means expenses payable.
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    So this is the case when we have
    an expense incurred
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    but we have not recorded that,
    the most typical case is employees
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    that work during the month.
    We have not paid their salaries yet
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    because we pay the first days
    of the following months,
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    so we didn't record the expense
    but they already work,
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    so there is a resource that has
    been consumed
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    and therefore we need
    to record an expense.
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    We need to record an expense
    and so we debit salaries expense,
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    for example, but because we have
    not paid yet in this period,
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    we need to record a credit in this
    liability which is salaries payable.
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    So here we have our adjusting entry.
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    This is in a very brief summary what
    you have learnt about adjusting entries.
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    Any question at this point?
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    All good?
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    So we can now apply these two
    practical exercises
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    and we will work with many
    adjusting entries,
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    so you will have the opportunity,
    to practice now with this
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    so I will put that...
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    Can you see the exercise?
    I am not sure about the zoom,
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    if it is ok or not,
    but I hope it's ok.
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    Ok, excellent, excellent.
    Thank you Jade, thank you all of you.
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    Ok, so we will apply to this exercise
    and we will start the exercise
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    at the point that we left last week.
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    Do you remember what we did last week?
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    We prepared the normal journal entries
    that come from transactions
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    and then we post the journal entries
    into ledger accounts,
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    and then we prepare a trial balance.
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    And we call that the unadjusted
    trial balance
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    because it's a trial balance that
    is prepared before the adjusting entries.
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    Ok, so we will start with this,
    the unadjusted trial balance, ok?
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    I had 30 of you.
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    And as you remember the trial balance
    is simply the list of all the accounts,
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    here you can see cash, account receivable,
    prepaid insurance, supplies,
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    all the accounts of the company, ok?
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    With the ending balance at
    the end of the period
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    so you can see the trial balance,
    the unadjusted trial balance
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    is prepared at the end of the period
    is the first thing that we do
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    at the end of the period before preparing
    the adjusting entries, ok?
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    So we prepare the unadjusted trial balance
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    and we have the ending balance
    for each of these accounts.
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    The ending balance of cash,
    the ending balance of accounts receivable
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    and service revenue is sitting
    on the fence, yes.
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    It moves to the fence,
    it should be here.
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    It should be on the column of credit
    of course,
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    that is a typing thing.
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    Service revenue should be
    in the credit side of course,
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    76,600.
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    Salaries expense, rent expense,
    so you have all of these.
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    The characteristic of the trial balance is
    that total debit should equal total credit
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    and you can see total debit, 201200
    and the same as total credit.
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    So this is our starting point
    for this exercise.
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    What means this?
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    All the normal journal entries
    are already recorded,
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    all of them are posted to
    the general ledger
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    and we prepare this unadjusted
    trial balance.
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    What is next?
    Well, here you have the exercise.
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    One thing before we go to the next page
    these are not the total,
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    all the accounts of the company.
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    There are accounts that they have
    with zero balance,
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    and of course they are not in the
    unadjusted trial balance
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    but here you have them listed.
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    They accumulated depreciation
    is one account,
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    office equipment another,
    electricity payable, salaries payable,
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    and so on.
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    So there are a number of accounts
    that have zero balance,
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    and therefore they are not in this
    unadjusted trial balance,
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    but they are accounts.
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    So we will go through the exercise.
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    Here we have added data.
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    This added data refers to
    the adjusting entries
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    that we need to prepare.
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    They are related to revenues earned
    or income earned and expenses incurred
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    so we need to prepare one adjusting entry
    for each of this additional data
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    and that is what is required,
    if you look at the question requirements,
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    prepare the adjusting entries
    for the month of June
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    so this is just for one month.
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    Prepare the adjusted trial balance
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    that is prepared after
    the adjusting entries
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    and we will calculate the profit
    for the month.
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    So we will go one by one
    to see how to prepare this.
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    And I will detail all of them
    in this first exercise
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    and then I will go a bit more quick
    in the second exercise,
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    or in the exercise of the workshop.
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    So the first, supplies on hand
    at start of June total 7200.
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    What this tells you,
    supplies on hand total 7200.
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    Well, if this is the data we have
    that means somebody went to the...
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    To the place that we have the supplies,
    they count them,
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    they value them and at the end
    the conclusion is
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    we have 7200 supplies on hand.
    That means not used.
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    How much do we have in our
    unadjusted trial balance?
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    So we need to look at here,
    supplies. 13,300.
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    But it says that we have only 7200 so
    that means we need to make an adjustment.
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    We need to reduce this 13,600
    and to record an expense,
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    a supplies expense for the difference.
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    So 13600 less 7200 that we have,
    that means we have consumed
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    or used 6400 of supplies,
    and that is the adjusting entry.
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    We need to record the expense for this
    so we will have a supplies expense of 6400
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    and we will credit supplies to reduce
    the supplies account.
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    So here you have the first journal entry,
    adjusting entry.
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    Supplies expense debit 6400,
    and supplies credit 6400.
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    When you do this and you credit supplies
    by 6400,
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    if you remember the ledger accounts
    when we credit one of the ledger accounts
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    that is supplies, that will decrease
    the balance of supplies account
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    which is 13600,
    so now the new balance of supplies
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    is 7200 which is the amount that we
    really have in supplies.
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    Any question on this?
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    So this is the first adjusting entry.
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    Yes Natalia, yes please tell me.
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    NATALIA: Hello Herman,
    yeah I see...
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    I've seen how this, I guess many of us
    do print out this worksheet information
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    of the sample of the questions,
    and we have ended one,
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    and last lecture I was asking you
    to let us print full ones
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    because it's hard to follow up because
    our worksheet is empty at the moment,
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    it means we follow up on the computer
    but can't do notes straight on our papers.
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    Yeah, this will be great because...
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    HERMAN: Yeah, actually I remember that
    and at 10 am today,
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    I uploaded the solution for the lecture
    exercise and the workshop exercise.
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    I opened that for you and for everybody,
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    so you can print them and you can be
    with the solutions
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    and you can follow the solutions
    NATALIA: Ok, now yeah...
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    You do this adjusting notes
    much in advance
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    but is it, you can give us indication
    when you do apply the solution
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    on a regular basis because our paper
    is usually a couple days before
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    I print out,
    and have this, yeah.
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    HERMAN: I will do that because I agree
    with what you asked me last week.
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    I agree that it's good that
    you have the solution
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    to follow the lecture and the workshop
    with the solution so you can take notes
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    in the solution which will be easier.
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    That' s why I opened today at 10 am and
    I put an announcement on the blackboard
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    for all of you to know that they are ready
    for you to print,
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    and I think that is what we talked
    because the idea
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    is that you try to do this by yourself
    without the solutions,
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    and that is the main purpose,
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    that's why I put in the same day
    of the lecture and workshop.
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    I will release these only for you
    to print out and to take that today,
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    later in workshop.
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    NATALIA: Ok, and how many it means
    they're empty for purpose,
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    we have a chance to try,
    and field solution is gonna be
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    in the very last day before lecture,
    for future use.
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    HERMAN: Yes, I will do that in that way
    all the time.
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    So I actually did the two purposes.
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    One purpose is for you to try
    without solutions,
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    just with your learning from the videos
    and PowerPoints,
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    and second, to have the solutions
    before the lecture and workshop
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    so you can go through them as well.
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    Ok, good.
    Excellent Natalia, thank you.
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    Now we can go to the second one.
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    The second says an electricity bill
    for 1200 has not been recorded
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    and will not be paid until next month,
    so what does this description mean?
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    If the company receives an electricity
    bill for 1200,
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    it means that they used,
    they consumed electricity for this amount.
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    It is already consumed therefore
    it is an expense,
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    but has not been recorded.
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    So the only thing,
    this is a simple adjusting entry,
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    the only thing that we need to do
    is to record the expense,
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    so we will have electricity expense, 1200,
    but because it was not paid this month,
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    next month will be paid,
    so we will credit a liability
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    which is electricity payable,
    and that is what you have here.
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    So in this adjusting entry we will record
    debit electricity expense 1200,
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    credit electricity payable 1200.
    Yes Natalia?
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    Stella, Stella. I need to put you
    as a caption here, Stella.
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    Give me a second because I need
    to put the caption here of Stella
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    but I don't find you in the list,
    we have a big list of students.
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    Near the top, ok?
    Ah, there it is. Thank you Stella.
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    Ok, yes Jade.
    You have a question?
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    JADE: I do, yes.
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    I put there instead of electricity payable
    I put accounts payable.
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    Is that okay or is that a problem?
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    HERMAN: It is ok.
    If we are very strict in that
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    which is not the case because accounts
    payable is rational to use this.
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    When we talk about accounts payable,
    It's the accounts payable to suppliers,
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    so we always link accounts payable
    for the amount that we owe to suppliers.
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    That's why it's better,
    I would not consider it wrong
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    but it's better to put this explicitly
    electricity payable because this is...
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    These are utilities that the company
    received,
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    so electricity or water
    or that type of thing.
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    So I would prefer to put separated
    from accounts payable
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    just because the concept of accounts
    payable is linked to suppliers of produce.
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    Ok? But it's not wrong.
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    Ok, any other question for the second...
    for the second adjusting entry?
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    So we'll go through the third
    adjusting entry.
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    Insurance policy, here you can see
    one statement that didn't say anything,
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    and you cannot do anything unless
    you go to the data
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    that is in the unadjusted trial balance.
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    The statement says the insurance policy
    is for a year commencing 1st May 2019.
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    Well, this is all what you need to
    prepare the adjusting entries,
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    because you have the unadjusted
    trial balance.
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    The only information here is that the
    insurance policy is for one year,
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    12 months, and starts on 1st May 2019,
  • Not Synced
    so we will see what is the information
    we have in the unadjusted trial balance.
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    First, this company started
    on 1st May 2019
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    which is the same day
    of the insurance policy, ok?
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    Insurance policy is added 1st May 2019.
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    And the trial balance is at June 30.
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    What is the prepaid insurance?
    9600.
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    9600, this is for 12 months,
    so how much is a month?
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    It is 800, so this is equal, ok,
    1800.
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    300 per month.
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    300 per month.
    Sorry for my numbers, I'm not very good.
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    So 800 is the insurance expense
    that how much we use
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    or consume of this policy per month.
    800 per month.
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    Now how many months between 1st May
    until the 30th of June?
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    Two months, exactly.
    Two months.
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    So what will be the expense
    that we have to recognize
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    or to recall on the 30th of June?
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    The expense for two months,
    that means 1600.
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    That should be a debit
    in insurance expense,
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    and a credit to prepaid insurance
    to reduce this 1600
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    because we already consumed 1600
    of insurance.
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    So the journal entry,
    the adjusting entry for this will be
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    debit insurance expense 1600,
    credit insurance expense 1600.
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    Ok, any question on this?
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    Ok, so we can have a look at the...
    Thank you Jade.
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    We can have a look at the next one.
    Salaries, sorry, not salaries.
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    That is the next one.
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    Number four, services were performed
    during the period in relation to $3000
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    of revenue in advance.
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    What does this description tell us?
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    First the description is telling us that
    we received revenue in advance,
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    that mean we received a payment
    in advance
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    and now in this period we provide services
    for 3000 of that payment.
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    We need to link this with how much
    we have in revenue received in advance
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    in the unadjusted trial balance
    so we will have a look.
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    The unadjusted trial balance, state this
    revenue received in advance, 4800.
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    Debit because we received this amount
    and we didn't provide the services
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    so we have an obligation to provide them
    and therefore it is a liability, ok?
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    Now we provide services for 3000
    of this 4800,
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    so we need to record a decrease in service
    revenue received in advance,
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    that means we debit 3000 in this account
    and we will have the current balance
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    of all these accounts,
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    so we debit 3000 in service revenue
    received in advance
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    and we will have a credit in service
    because we earned already this revenue.
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    We provided the service.
    Yes Jade?
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    JADE: Is this classified as an adjustment
    or is it just as a mistransaction?
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    HERMAN: It's an adjustment because
    the original transaction
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    that we already recorded, it is here
    in the unadjusted trial balance.
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    What was the original transaction?
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    When this happens, the service revenue
    received in advance I will write here, ok?
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    We have debit cash because
    we received the payment, ok?
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    That was in the previous period.
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    We record cash for 4800.
    Sorry for the numbers.
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    So 4800. We debit cash,
    and we credit, ok?
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    This revenue received in advance,
    I will put it just like that.
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    Revenue received in advance
    we credit 4800.
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    This is the normal journal entry.
    This is the normal transaction
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    that we recorded in the last period,
    and that's why when you look at this entry
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    and we post the accounts in the ledger,
    this is what we have there, ok?
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    That is the original transaction.
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    What happens now is that we just provide services.
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    Of course we didn't receive more money
    because already we were paid in advance
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    but we provide the service so we need
    to decrease this obligation or liability
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    for the 3000 already provided.
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    Well, George, it says because the concept
    of revenue received in advance,
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    the concept of that account
    is that received cash in advance.
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    That is what we received in advance,
    cash, the payment,
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    so if you look at the description,
    services were performed during the period
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    in relation to.
    In relation to what?
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    To revenue received in advance.
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    If you look at this description,
    revenue received in advance,
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    what it means is that the company
    received cash in advance
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    to provide the services.
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    The customer paid before we provide
    the service to the customer.
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    Ok, so cash was involved
    in the original transaction
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    and that is the transaction that
    I showed you that I prepared,
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    so how was it recorded the cash received?
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    We debit cash and we credit revenue
    received in advance from 4800,
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    that was the original transaction,
    it's not for this period,
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    that was before the 30th of June
    and that's why we have in the balance,
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    on 30th June we have that amount.
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    Now in this period the adjusting entry
    at the end of the period,
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    we need to include how much
    we provide of services.
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    And we provide 3000 of this 4800.
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    So because we provide services,
    now we can record the service revenue,
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    it's a credit service revenue,
    and we decrease the obligation.
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    To put the things in context,
    here we are in the month of June.
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    So in June the unadjusted trial balance
    is for June.
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    I will go through the depreciation
    but do not change them...
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    I will go through them,
    but here... Ok.
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    This is the unadjusted...
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    I am clear now, excellent Ann.
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    This is the unadjusted trial balance
    at 30th June.
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    Here means that before 30th June
    we received the cash.
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    Now in the adjusting entry it means that
    also during this period before 30th June
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    we provide 3000 of this 4800,
    services provided, ok?
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    Does this answer your question George?
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    Ok, excellent, good.
    So we can go through the next one.
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    I am here...
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    The next on is quite simple because
    salaries, 6400 are owed on 30th June.
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    What does this mean?
    Salaries owed means that
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    the employees worked,
    so we already consumed these results.
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    The work of our employees and therefore
    we should record a salaries expense.
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    But they are owed,
    that means we have not paid them,
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    and that's why we did not record this as a
    transaction like you learned last week.
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    We need to prepare the adjusting entry,
    so we need to recall the pays,
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    salaries expense 6400 debit,
    and a salaries payable
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    because it's owed at the end of the month
    so it will be salaries expense
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    and salaries payable.
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    Here you have debit salaries expense 6400
    credits salaries payable 6400, ok?
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    That I think is simple.
    Then we have the number six.
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    Office equipment has a five year life
    with no resale value,
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    and is being depreciated at
    $1440 per month for 60 months.
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    In this description they are telling you
    how much is the expense, ok?
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    But if it is not, if it is only they said
    the office equipment has a five year life
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    with no resale value depreciated using
    the straight line method,
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    you will learn this in another lecture
    the depreciation for 60 months.
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    If we do not have the amounts, you can
    just go to the unadjusted trial balance
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    look at the office equipment account,
    86400.
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    If you divide this by 60,
    you will have exactly 1440 per month, ok?
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    So that is the depreciation expense.
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    Yes, a couple of work, I will not go in
    deep in this topic
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    because there is a whole topic
    about depreciation.
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    Yeah, I will go why credit and...
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    Okay, you let me finish this part
    and I will answer the question
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    of the previous one.
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    So we had this depreciation,
    what does depreciation mean?
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    When we purchase an equipment like this,
    office equipment,
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    and we pay a big amount of money,
    in this case how much we paid
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    for this office equipment,
    it was 86400, ok?
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    Do you think we can put as an expense
    86400 in the first month?
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    Well, of course not because we will use
    this equipment during 60 months,
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    and remember an expense is when we use
    or consume resources.
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    This resource that is 86400, it will be
    consumed or used during 60 months
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    so we need to calculate how much of this
    we use in one month,
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    or in two months in this case.
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    In two months because it's from
    1st of May till 30th June.
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    How much we use of this in two months,
    ok? Two months.
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    So we divide this by 60,
    we multiply by two,
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    and that will be 2880 because per month
    is 1440 when you divide by 60,
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    you multiply by two because
    it's two months
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    and now we can record the expense.
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    The name of this expense
    is depreciation expense,
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    so we record debit depreciation expense.
    What is the other account?
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    Well the other account will be to decrease
    this account, office equipment,
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    so you can say well,
    we credit office equipment.
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    That would be the case that we are doing
    in all of these accounts,
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    but in the case of non-current assets
    we use what we call a contra asset account
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    that means we keep separated
    the decrease of this account
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    and the name of that account
    is accumulated depreciation.
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    The effect is the same as you reduce
    directly office equipment,
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    you credit office equipment
    but in non-current assets like this,
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    this is a topic that we will explore
    in detail,
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    we use another account and the name is
    the accumulated depreciation.
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    It's an asset account
    but with a credit end.
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    So the adjusting entry for this will be
    depreciation expense debit 2880
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    and we credit accumulated depreciation
    office equipment, ok, 2880.
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    Any question on this?
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    Ok, the last one.
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    The last one is number seven,
    invoices representing a (INAUDIBLEL)
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    Ah, ok. Before we go to the seven
    there is a question about the salaries
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    who asked me that question
    about the salaries?
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    Omar who did, in the adjusted trial, ok.
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    I will try to answer the two questions.
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    First, Trina has a question, why
    to credit 6400 in the transaction five?
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    Why to credit?
    Isn't it debit when they pay 6400?
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    Well, remember Trina that we, in any
    journal entry and also adjusting entry,
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    we have a debit side and a credit side.
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    The total debit should be always equal
    to total credit.
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    So what is the debit and what is
    the credit in the 6400 that you have here
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    in transaction five?
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    Salaries of 6400 are owed at that time,
    30th June.
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    So we have an expense,
    and the expense is a debit entry, ok?
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    The salaries expense it will be debit.
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    And we have a salaries payable because
    they were not paid,
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    they are owed at 30th June.
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    So the salaries payable, the liability
    will be the credit entry.
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    So your question is why credit?
    Well, we credit the liability account,
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    that means salaries payable,
    but we debit the salaries.
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    What happens when we pay them in
    the next period?
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    When we pay the salaries we will
    debit the salaries payable,
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    so we decrease this liability,
    and we will credit cash, ok?
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    That is what happened in
    the following period, not in this one.
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    Cash, ok. That is what happened
    in the following period,
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    not in this one.
    And Davlin...
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    Davlin you asked a question
    about the depreciation?
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    Yes, depreciation, well, this is
    the concept that will have in detail,
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    there is a whole lecture about
    depreciation
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    with different methods of depreciation
    but for now,
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    we only need to think in the concept
    of depreciation, the general concept.
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    When we purchase an equipment
    that lasts more than one accounting period
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    we cannot record as an expense
    the cost of the equipment
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    because we will use the equipment
    for a number of periods,
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    so we need to divide the cost of
    the equipment
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    into the number of periods.
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    So we will have just one part of the cost
    in each period,
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    and the easier way is just divide the cost
    by the number of periods.
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    So in this case the total amount
    divided by 60 months that we will use
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    this equipment, office equipment,
    means that we will have an expense
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    of 1440 per month, and we call that,
    that expense,
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    we call that depreciation expense, ok?
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    That is the name of this account,
    depreciation expense.
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    What does that mean?
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    It means that that is the part of the
    equipment that has been used or consumed
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    in one period.
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    And that's why we record that
    as a debit for each month,
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    but here we have two months, ok?
    Because from 1st May until 30th June
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    which is the time for this exercise,
    two months,
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    it will be two multiplied by 1440,
    which is 2880.
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    So we will record depreciation expense,
    debit 2880.
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    What is the other account?
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    I mentioned that there is another account
    but the name is accumulated depreciation,
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    so we will record a credit
    in that account.
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    Ok, I'd asked how much would you deduct
    from depreciation expense
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    in the adjusted...
    Excellent Davlin, thank you.
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    How much would you deduct in the
    adjusted trial balance?
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    I will go through that because we started with
    the unadjusted trial balance.
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    We are doing the adjustments, and then
    I will explain how we will adjust these
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    to the adjusted trial balance.
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    How we transform the unadjusted to the
    adjusted trial balance.
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    Ok, yes Trina.
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    TRINA: Hello, with the salaries,
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    we already had 6400,
    it means that expense increased,
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    that's why expense is debit 6400,
    but with the liabilities,
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    it means that we decrease
    the liabilities, is that right?
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    HERMAN: Yes when (INAUDIBLE)
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    TRINA: So if we decrease the... (CROSSTALK)
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    Sorry, if we decrease the liabilities,
    it means it debits liabilities,
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    is that right?
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    HERMAN: Yes, when we pay that is
    another transaction,
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    it's not the adjusting entry.
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    When we pay for the liability,
    we will credit the liability
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    so we decrease the liability,
    and we will debit cash.
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    So we decrease cash because we are paying
    for that liability.
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    But that is another (CROSSTALK)
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    TRINA: yeah, I'm a bit confused because
    we decrease the liabilities,
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    but when you put it credit 6400.
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    HERMAN: Yeah, well, that is the point.
    Trina it's good that you asked
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    because we should not confuse two
    different journal entries, ok?
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    The journal entry that we're talking
    in number five here,
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    is an adjusting entry.
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    We have not paid anything
    in this journal entry.
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    In this transaction, we only recognize
    that the employees worked
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    during the months,
    how much we owe them for this work, 6400.
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    We didn't pay anything.
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    In the transaction here it doesn't say
    that we paid for that.
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    We owe this amount at 30th June.
    So what do we record?
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    We record the expense,
    that means debit salaries expense, 6400,
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    and we record the liability because
    we owe them this amount,
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    so we credit salaries payable, 6400
    and that's all.
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    That's all the adjusting entries.
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    Now in another day, next month,
    we will pay for them.
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    In the payment that is another
    journal entry, not this one,
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    when we pay for them what will we do?
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    We will debit the liability,
    so we decrease the liability.
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    We will debit 6400, and we will pay,
    that means we will credit cash.
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    When we credit cash we decrease
    the cash account
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    because we are paying that amount
    and that is another journal entry
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    for the next period.
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    Does this clarify the point Trina?
    Good, excellent.
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    Ok, we are in the number seven,
    the last one.
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    Invoices representing $8000 of services
    performed during the month
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    have not been recorded as of 30th June,
    so what does this mean?
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    We have provided services because
    it says invoices representing
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    $8000 of services performed during that,
    so we performed this service,
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    and we provided the services
    for $8000
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    but they have not been recorded
    so we need to record them them.
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    So we need to record
    an accounts receivable
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    because it doesn't say anything there
    that we received the money,
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    therefore it is an account receivable,
    we will debit...
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    (CLEARS THROAT)
    Sorry.
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    We will debit the account receivable
    for $8000,
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    and we will credit the service revenue
    because we earned from that service,
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    we already provided the service,
    so we will credit service revenue.
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    So what we will have...
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    I will do that.
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    What we will have is the
    last adjusting entry.
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    $8000 account receivable debit,
    and credit $8000 service revenue.
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    So we've completed
    all the adjusting entries.
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    Before we go to how we prepare the
    adjusted trial balance,
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    any questions about the adjusting entries?
    All good? Ok.
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    Excellent Jade, very good.
    That's my purpose.
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    How we prepare the adjusted trial balance?
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    Before we prepare that,
    remember these are journal entries,
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    so the name is adjusted journal entries,
    they are journal entries,
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    so after you prepare the adjusting entries
    what is the next step?
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    You need to post these entries
    to the ledger.
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    The same as we did last week,
    exactly Joshua,
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    we need to post them to the ledger,
    all of them to adjust the balance
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    of each of these accounts.
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    We will not do that, ok?
    You already learnt last week
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    how to post transactions from the journal
    to the ledger,
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    and it's a very repetitive process
    and it's the same in this case
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    so we will not go again through that part
    we will assume that we already did that,
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    Ok, we post all of these
    to the ledger accounts,
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    so the ledger accounts are updated.
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    But I will show you how to prepare
    the adjusted trial balance,
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    using the worksheet, ok?
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    Using a worksheet, it has the advantage
    that you can see
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    what is the unadjusted trial balance,
    you can see the adjustments
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    and how to prepare the
    adjusted trial balance,
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    how you can explain the difference
    between the adjusted
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    and the unadjusted trial balance.
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    So here you have this worksheet.
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    In the worksheet what we do
    is you copy here in this part, ok?
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    You copy the unadjusted trial balance.
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    Of course, total debit should
    be equal to total credit.
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    You just copy that and then you go
    through all the adjusting entries
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    and you put in the adjustment column,
    this, I will do just the first two, ok?
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    Only the first two.
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    So in the first one,
    what do we have here?
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    We debit 6400 in the supplies
    expense account
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    and we credit 6400
    in the supplies account,
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    so we look at this supplies
    expense account.
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    This is the supplies expense account,
    we debit 6400, so we just copy there
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    And the we go to the supplies account
    this is the supplies account,
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    you debit this account, ok?
    You just copy here in these two columns
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    what you have done
    in the adjusting entries.
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    The second, we will do just the first two.
    The second, what do we have?
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    1200 debit in electricity expense account
    1200 credit electricity payable account.
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    So you copy that electricity
    expense account,
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    1200 debit, you copy there
    and then you look for electricity payable.
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    Electricity payable credit 1200,
    and you continue with all of this.
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    The only thing that you need to be careful
    is that sometimes,
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    one account appears more than one time
    in the adjusting entries.
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    So if you look at the adjusting entries,
    there is one account
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    that appears two times,
    so service revenue.
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    You have here service revenue,
    credit 3000,
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    and then you have here service revenue,
    8000.
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    So the total amount that we will add
    to service revenue is 11000.
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    That's why here service revenue
    in the credit is 11000,
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    so its the sum of 3000+8000.
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    That you need to be careful because
    we need to add the total amounts,
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    they've increased the credit
    of this account.
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    Ok, so we complete these,
    the adjustments.
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    We just copy all the adjusting entries,
    debit or credit
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    in the corresponding accounts.
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    Well, it's a really (INAUDIBLE)
    because very few accounts
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    you will have more than one entry.
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    In this case we have only service revenue
    but you know the to not make a mistake
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    and I did that in the next exercise,
    is this things.
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    Do not make a mistake, I will give you
    a clue to not make a mistake.
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    Instead I've put here the total.
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    Every time you have an amount there
    just put how much,
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    so you put here the 3000,
    I will put in thousands
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    and then you simply add 8,
    so every time you put the number there.
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    Then you know that it's 11000.
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    In this way you will not skip anything.
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    Ok, that is just a way to do
    to not make that mistake.
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    How we prepare now the
    adjusted trial balance.
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    The adjusted trial balance is the same
    as the unadjusted trial balance
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    with all the adjustments.
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    So you can see for the cash accounts,
    there are no adjustments.
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    Ok, no adjustments, so the adjusted
    trial balance is the same
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    as the unadjusted trial balance.
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    Accounts receivable, the unadjusted
    is 23 and 40.
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    The ajustment is debit 8000
    so it directly increases the revenue
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    so the adjusted will be the sum
    of all of them.
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    Prepaid insurance we have a debit,
    9600.
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    The adjustment is a credit of 1600,
    a credit decreases a debit,
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    it's the opposite, ok?
    So it will be the difference
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    and there we adjusted this 8000.
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    The same for supplies,
    we have 13600,
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    the adjustment is a credit,
    therefore the credit decreases debit,
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    that will be 7200, ok?
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    And so on.
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    Office equipment there is no adjustment
    accumulated depreciation
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    of office equipment,
    there is nothing here,
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    because this is an account that was
    in zero but we have an adjustment of
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    so the adjusted trial balance will be
    a credit 2880.
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    So you can see to prepare the adjusted
    trial balance is simple.
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    If we're working with the worksheet,
    we just add or subtract the adjustment
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    depending on whether they are
    on the same side or the opposite side.
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    If they are on the same side,
    a debit increases a debit,
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    a credit increases a credit,
    but in the opposite side
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    a credit will decrease a debit
    or a debit will decrease a credit.
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    Any question?
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    So once you have these working...
    Excellent Joshua,
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    Once you have the working,
    the adjusted trial balance
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    you can just copy.
    You have the list of...
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    You have the list of all this, ok?
    The list of the accounts,
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    you have the balance,
    the debit balance or the credit balance
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    of all of these accounts,
    and you can just copy them
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    to have the adjusted trial balance
    so if this is the adjusted trial balance
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    the list of the accounts,
    what accounts have a debit balance
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    after the adjustments,
    or credit balance, all of these accounts.
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    That's the complete exercise and
    the adjusted trial balance.
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    Any question?
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    I think maybe we will use again
    the four hours
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    because we still do not finish
    the lecture,
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    we have the second exercise
    of the lecture
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    and then we have the exercise
    of the workshop
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    so definitely we are using
    the consultation time of the
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    four hour to complete,
    but at this point,
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    we are already one hour 40 minutes.
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    It's good for you to have a break
    so you can just prepare your coffee.
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    No Natalia, I will answer that.
    You prepare your coffee,
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    you're suffering, take a rest,
    and we will meet in 10 minutes.
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    Before I go I will just answer
    the question to Natalia.
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    Still accountants do this step manually?
    No, Natalia, no.
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    I will talk about this when we come back
    after 10 minutes
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    because I will talk about the assignment.
    That will answer your question.
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    And Davlin, can you explain profit thing?
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    Yes I will do that in the next exercise,
    need more exercise,
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    we will do four Abdul, today.
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    If we aren't late, pm,
    no problem for me,
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    but if you have the strength
    to still be there,
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    we'll be good...
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    We will...
    We will do many exercises today,
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    but for now take a rest, relax.
    I need to grab my coffee as well,
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    and 10 minutes, so it's 2.40.
    At 2.50 we continue.
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    I will disconnect the microphone,
    2.50 we continue, ok?
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    Ok, here we are again, more relaxed and
    ready for another one and a half hours.
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    Before starting on the next exercise
    I will just give you some information
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    about your first assignment.
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    The assignment that you will have
    is a very practical assignment
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    and this will address one of the questions
    about Natalia,
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    Natalia asked, still accountant do
    these steps manually?
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    Well, accountants do not do this manually
    but of course the need to understand
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    what the system does because if not,
    the possibility of errors
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    could be very big.
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    When you enter a journal entry
    you need to understand
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    what continues after that,
    even the system is doing that
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    but you need to know how your ledger
    is updated,
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    how the trial balance is prepared,
    it's very important to do that.
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    That's why you learn to do this manually
    even though then
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    the system will do this for you.
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    OK, but you need to be able to check
    whether the system is doing well or not.
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    In this course you will have
    the opportunity to deal with
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    one of the most commonly used
    Accounting software,
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    it's a cloud accounting because
    everything is in the cloud
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    and not in the computer of
    the organization,
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    and that is Xero.
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    Xero is used by many small
    and medium companies.
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    Not the very big ones because they
    have their own systems,
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    but many small and medium companies
    use Xero.
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    Accounting Pod is an organization
    that facilitates the learning
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    of this various software.
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    Griffith University has an arrangement
    with Accounting Pod
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    to provide this facilitation,
    for learning Xero,
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    and we have set up the assignment
    that you will have in this,
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    using this software.
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    So next Monday, 3rd August,
    the module,
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    the practice module of Accounting Pod
    will be open for you.
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    And it will be open practically
    the whole month of August,
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    until the 27th of August,
    that will be closed at 5.00 pm.
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    So what is the idea is that you do this.
    You follow step by step
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    all the processes and you will learn
    how to use this software,
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    so you will do what accountants do
    in the practice, ok?
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    And this assessment, the assignment
    we have two parts,
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    we have the practice model
    that it's called,
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    that will be open next Monday,
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    and then after it is closed,
    that means the 27th of August.
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    On the 1st of September we will open
    the second part of this assessment
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    which is the Xero assessment.
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    That will be opened on the
    1st of September,
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    and it will be closed on the 23rd
    of September, 5.00 pm,
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    so at that point you need to finish
    the second part.
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    Your marks will be based on what you do
    in this task.
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    The marks are allocated...
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    The marks are allocated to the task
    that you are doing.
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    Now, in the question by Jade,
    what learning modules
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    will the practice on Xero cover?
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    What you need to know is just the basics
    of the accounting cycle,
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    so to understand what is a journal entry,
    what are the ledger accounts.
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    But the training that you will do,
    you will see it's very...
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    Totally different to what we are doing
    in the accounting period,
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    because you will do tasks related
    to a software.
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    I will explain in a bit of detail
    but next week, on Tuesday of next week,
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    you will do a task related to a software.
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    I will in a bit of detail, but next week,
    on Tuesday next week
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    I will dedicate more time to explain
    to you in more detail
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    what you have to do because at that point
    you will have this already open, ok?
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    Now it's not there,
    you cannot see this software yet.
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    There are three modules in each
    assessment task,
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    the practice and the assessment.
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    Your marks for the assignment
    will be the average of all these,
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    ok, the practice and the assessment.
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    You will have a rubric for this
    so you will know exactly how
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    your marks will be allocated.
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    The system marks you, so it's not that
    I will mark this.
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    For each task completed,
    the system will mark you,
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    and you will have the marks
    according to the task.
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    I will give you some guidelines
    next week on that.
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    But in the first part, the practice set,
    there are three modules, actually four,
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    but the important models
    are modules two and three.
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    The module one is just a welcome for you
    to have a welcome to the system,
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    there are no marks allocated there.
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    Module two is the basics,
    and there are 20 marks allocated there.
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    There are very simple tasks that will
    tell you how to work in Xero.
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    One of the tasks is for example to set up
    an authentication in door,
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    so it's not related to accounting at all,
    but is related to working with this...
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    with the system.
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    My suggestion would be to always
    look at the question that you have
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    for each task and the possible answer,
    and then look at the content.
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    Try to not answer the question immediately
    but go through the content.
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    You will learn through the content,
    not just answering the questions.
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    Try not to do what is...
    You look at the question, possible answer,
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    and then you try to find the answer
    in the content,
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    because you will not learn a lot.
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    The idea is that you learn how
    to use Xero, this system, ok?
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    And to learn that it's good that you
    go through the content
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    trying to learn what is this about?
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    And the next module,
    the module three that is Xero,
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    in that module you will work in Xero.
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    So module two is just to prepare,
    you will be prepared to work with Xero
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    but it's not yet the working withing Xero.
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    Module three yes,
    you will have a number of tasks
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    following the instructions that
    Accounting Pod will give you
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    to complete this task
    and provide the answers.
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    So then the module four is just to wrap up
    a couple of questions,
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    but not really important.
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    Module two and three are
    the most important.
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    Now when you finish one module,
    then you will have access to the next one
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    and so on,
    so you need to go step by step.
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    In this sense, this is,
    even though you need some knowledge
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    in accounting that you already have,
    you don't need more than that
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    because it's different to learn how to
    work with a software in accounting
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    than how to do accounting,
    that is what you are doing now.
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    Then the assessment part is just the
    application of all what you have learned
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    in the practice part,
    and in a different case scenario.
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    So that is in general what you will
    from next week,
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    there is time,
    don't wait till the last two days.
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    For example, it opens 2nd August,
    it will be closed 27th of August,
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    do not wait until the 25th of August
    for all the task,
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    because you need time for that.
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    You need time to reflect on what
    you're learning,
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    you need time to properly do the task
    and go just a little bit
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    during the time this will be open.
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    It will not take a long time, ok?
    it will not take a very long time,
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    probably you can do this in three
    or four days, if you dedicate full time,
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    but that is not the best way to learn.
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    Yes, you will have marks Cecilia
    in the practice part
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    and actually the total marks
    that you will have is the average
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    weighted average of the practice part
    and the assessment part.
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    I also considered to give marks
    for the practice part
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    because in the practice part,
    it will be easier for you,
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    but the intention is that you learn
    how to use the software
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    and how to use this software
    is in the practice part.
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    In the assessment part
    you will apply all of this,
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    so there are marks allocated
    in the practice part as well, yeah.
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    So this is just some information that
    i want to give you in advance
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    and next week with this open,
    I will show you the screens
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    and I can share screens
    for you to do this.
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    Cecilia, is there any way we can practice
    using the system without getting marks?
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    Yes, because you don't need to submit
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    but now you will see
    it's very straightforward,
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    the system will tell you
    exactly what to do,
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    so if you do well, you don't need
    to do it again,
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    but try to do well.
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    Now there is some not in the practice part
    but in the assessment part
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    there is feedback that you can receive
    and also you can ask questions.
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    Now the specific question of the software
    please do not ask me that way
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    but to the system, there is a box
    that you will see next week,
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    that says 'leave us a message'.
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    You leave all the questions there
    and they will answer you immediately.
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    If you have a problem with this,
    of course you contact me
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    and I will deal with them, but they
    answer quite quick all your questions.
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    Ok, now I have another message,
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    and this is another caption.
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    Who sent me a message about captioning?
    They'll need the captioning.
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    Cassandra is that you?
    Ok, I've added you.
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    Ok, so now we can continue
    with the next exercise.
Title:
4b4e38a4-1395-415d-94fd-3fc7bb2ec59f - Lecture & Workshop 3 RFCC.mp4
Video Language:
English
Duration:
03:50:26

English subtitles

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