...Liabilities, equity and revenues can be considered the opposites to assets and expenses in that they form a debit when decreased and a credit when increased. From this, a duality of recording is formed since every event of recording a transaction involves recording one debit and one credit. For example, Famous Zamous, a cookie company sold $1000 worth of cookies on the 1st of April. $1000 is then recorded as a debit under the account Cash (an Asset account) and a credit under the account Sales Revenue. Generally debits and credits equal to one another, ensuring the balance of the accounting equation. Accrual Accounting attempts to recognize events either before or after those events have been settled in cash (Zafirakis 2005:33). Because we do not consider when the cash transaction has happened, there are four scenarios that require us to adjust entries made in the double-entry system after a financial period of time has passed. This ensures an accurate account of a business' revenue and expense events. To illustrate this, the four scenarios of when adjustments need to be made will be expanded....
