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Additionally, periodic reporting and the matching principle necessitate the preparation of adjusting entries.

Remember, the matching principle indicates that expenses have to be matched with revenues as long as it is reasonable to do so.

Previous year journals are used to make corrections to your accounts after you have processed a year end.

Previous year journal values are recorded differently depending on whether journals are posted to Balance Sheet or Profit and Loss accounts.

You can't enter a previous year journal if the accounting period doesn't exist.

For a merchandising company, Merchandise Inventory falls under the prepaid expense category since we purchase inventory in advance of using (selling) it.The parent places those assets that qualify on its own balance sheet at fair value to show that a portion of the amount paid for the subsidiary was the equivalent of an acquisition price for these items.That is a major reason why companies such as Microsoft and Procter & Gamble report billions of dollars in intangible assets. GAAP, certain requirements have to be met before such intangibles are recognized as assets on a consolidated balance sheet following a takeover.Email our authors Sorry, but we can't provide technical support from this email address.If you need assistance, then please contact our support team directly.

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