▶ Open the Adjustments Cycle Workbench
A complete cycle for Lakan Consulting built around all five families of adjusting entries: prepaid insurance, supplies, depreciation, unearned revenue, accrued revenue, and accrued salaries. Post the routine month first, then watch each adjustment ripple through the ten-column worksheet and reshape the financial statements live.
Online-exclusive visual guides
1. The five families — sorted by cash timing
Every adjusting entry answers one question: did cash move BEFORE or AFTER the revenue/expense? (Depreciation is a special long-term deferral.)
| Family | Cash moved… | Adjustment pattern | If you forget it… |
|---|---|---|---|
| Prepaid expense | Before the expense | Dr Expense · Cr Prepaid (asset) | Assets overstated, expenses understated → income overstated |
| Depreciation | Before (at purchase) | Dr Depreciation Expense · Cr Accumulated Depreciation | Assets & income overstated |
| Unearned revenue | Before the revenue | Dr Unearned Revenue (liability) · Cr Revenue | Liabilities overstated, revenue understated |
| Accrued expense | After the expense | Dr Expense · Cr Payable | Liabilities understated, income overstated |
| Accrued revenue | After the revenue | Dr Receivable · Cr Revenue | Assets & revenue understated |
Pattern to memorize: every adjusting entry touches exactly ONE income-statement account and ONE balance-sheet account — and never Cash.
2. The deferral timeline — watching a prepayment melt
₱9,000 rent paid on April 1 covering April and May (₱4,500/month), asset method:
3. Depreciation in one line — straight-line, full-month convention
Monthly depreciation = (Cost − Residual value) ÷ Useful life in months
Practice tools
Tool 1 · Straight-line depreciation calculator
Enter any asset profile — get the monthly AJE and a book-value check.
Tool 2 · Adjustment family sorter
Classify each year-end situation into its adjustment family.