0:00:00.560,0:00:03.120

All right. Now let's go to the accrued

0:00:01.920,0:00:04.640

side of it we're going to talk about

0:00:03.120,0:00:07.520

accrued expenses here.

0:00:04.640,0:00:09.280

Now deferred is the things that cash has

0:00:07.520,0:00:10.320

been affected we just haven't recorded

0:00:09.280,0:00:12.160

them yet

0:00:10.320,0:00:14.160

uh because either we got prepaid or we

0:00:12.160,0:00:15.200

paid our prepaid ourselves, so the cash

0:00:14.160,0:00:16.080

has already been affected we just

0:00:15.200,0:00:17.920

haven't recorded.

0:00:16.080,0:00:19.279

Accrued is the other side of it these

0:00:17.920,0:00:20.800

are the things that we've been earning

0:00:19.279,0:00:22.240

or we've been using we just haven't paid

0:00:20.800,0:00:23.920

for them yet, cash has not been affected

0:00:22.240,0:00:25.039

yet it'll be affected later on

0:00:23.920,0:00:27.439

and these are again the things that we

0:00:25.039,0:00:29.439

can push back until december 31st.

0:00:27.439,0:00:31.039

So accrued expenses are the ones dealing

0:00:29.439,0:00:32.800

specifically with expenses,

0:00:31.039,0:00:34.640

these are the costs that are incurred in

0:00:32.800,0:00:35.760

a period that are both unpaid I haven't

0:00:34.640,0:00:37.040

paid them yet

0:00:35.760,0:00:38.480

and they're also unrecorded I haven't

0:00:37.040,0:00:40.800

recorded them yet, that's we're waiting

0:00:38.480,0:00:42.879

until december 31st to do this.

0:00:40.800,0:00:44.640

An example of this one, this one's not

0:00:42.879,0:00:45.520

dependent on what's happened already

0:00:44.640,0:00:46.960

remember I told you

0:00:45.520,0:00:48.399

the deferred expenses and deferred

0:00:46.960,0:00:49.440

revenues we said these are things that

0:00:48.399,0:00:49.920

we've already done in the middle of the

0:00:49.440,0:00:51.120

year

0:00:49.920,0:00:53.039

you're not going to see these already

0:00:51.120,0:00:54.559

affected in the previous examples these

0:00:53.039,0:00:55.120

are new adjustments that we're going to

0:00:54.559,0:00:57.039

look at,

0:00:55.120,0:00:58.559

so this one says december 31st bravo

0:00:57.039,0:00:59.520

company accrued six thousand dollars of

0:00:58.559,0:01:00.879

salary expense

0:00:59.520,0:01:02.559

that will be paid at the beginning of

0:01:00.879,0:01:04.080

the year. Now

0:01:02.559,0:01:06.080

I guess the way to look at this one is

0:01:04.080,0:01:08.960

maybe this company pays their employees

0:01:06.080,0:01:11.760

on the last day of the month but maybe

0:01:08.960,0:01:13.119

december 31st falls on a saturday,

0:01:11.760,0:01:14.320

and the banks aren't open yet, so they're

0:01:13.119,0:01:15.119

actually gonna have to pay their their

0:01:14.320,0:01:16.560

employees

0:01:15.119,0:01:19.119

the following monday which would be

0:01:16.560,0:01:20.640

january 2nd well that's a different year

0:01:19.119,0:01:23.200

and we have to only

0:01:20.640,0:01:23.680

be able to recognize things just in this

0:01:23.200,0:01:25.840

year,

0:01:23.680,0:01:27.040

remember we start january 1st in

0:01:25.840,0:01:28.880

december 31st,

0:01:27.040,0:01:31.920

we have to record at this time. So we've

0:01:28.880,0:01:33.680

used our employee services

0:01:31.920,0:01:35.520

we're just not paying them yet, so we've

0:01:33.680,0:01:36.720

got to put them into an expense account

0:01:35.520,0:01:39.439

but we're going to hold back

0:01:36.720,0:01:41.520

off on the cash right now. So let's look

0:01:39.439,0:01:45.759

at how we would how we would do this,

0:01:41.520,0:01:47.600

uh december 31st uh I owe my employees

0:01:45.759,0:01:49.040

money but I've also used their services

0:01:47.600,0:01:50.479

so first and foremost I'm going to put

0:01:49.040,0:01:51.439

as a debit because we're dealing with

0:01:50.479,0:01:53.680

expenses here,

0:01:51.439,0:01:54.479

I'm going to put december 31st salaries

0:01:53.680,0:01:56.320

expense

0:01:54.479,0:01:57.840

I've used their services I'm going to go

0:01:56.320,0:01:58.799

ahead and expense it I'm going to put it

0:01:57.840,0:02:00.640

at 6 000,

0:01:58.799,0:02:02.719

and normally I would probably put cash

0:02:00.640,0:02:04.799

as the the credit,

0:02:02.719,0:02:06.000

but again this is an adjustment this is

0:02:04.799,0:02:07.119

things that I'm not paying them cash

0:02:06.000,0:02:08.879

right now I'm going to pay them a later

0:02:07.119,0:02:10.560

date because it happens next year,

0:02:08.879,0:02:12.800

okay, so I've got to figure out a way to

0:02:10.560,0:02:14.239

say I still owe them that money

0:02:12.800,0:02:15.599

and what are we expected to do with this

0:02:14.239,0:02:17.040

money well we're expected to pay it to

0:02:15.599,0:02:18.879

our employees later on so this is going

0:02:17.040,0:02:20.239

to be a payable account,

0:02:18.879,0:02:22.000

but it's not going to be an accounts

0:02:20.239,0:02:23.599

payable this is a payable specifically

0:02:22.000,0:02:24.720

to salaries, so we're going to call it

0:02:23.599,0:02:25.920

salaries payable,

0:02:24.720,0:02:27.599

and that's going to be our crediting

0:02:25.920,0:02:28.879

account for six thousand and then when

0:02:27.599,0:02:30.640

we actually do pay it we'll take it out

0:02:28.879,0:02:32.000

of salaries payable and then also take

0:02:30.640,0:02:33.120

it out of cash,

0:02:32.000,0:02:34.640

but for right now this is what we're

0:02:33.120,0:02:36.640

dealing with because this is the period

0:02:34.640,0:02:37.840

in which we're in, that's how we do an

0:02:36.640,0:02:40.800

accrued expense.

0:02:37.840,0:02:40.800

Appreciate it.