Adjustents And Their Effect on Final Accounts1. Cash system2. Accrual or Mercatile systemcash systemThe cash basis accounting system records transactions only when cash is received or paid out. It's a simple method commonly used by small businesses andindividuals because it's easy to understand and implement. In this system, revenue is recognized when cash is received, and expenses are recognized when cashis paid.Accrual or Mercatile SystemThe accrual or mercantile system of accounting recognizes revenue and expenses when they are earned or incurred, regardless of when cash is exchanged.This means revenue is recognized when goods are delivered or services are performed, and expenses are recognized when goods or services are received or consumed.MAI TYPES OF ADJUSTMENTS1. Accured Expenses or outstanding Expenses or Expemses payable .Accrued expenses, outstanding expenses, or expenses payable refer to expenses that have been incurred but have not yet been paid by the end of the accountingperiod. These expenses are recognized on the income statement and are recorded as liabilities on the balance sheet until they are paid.2. Prepaid Expenses or unexpired Expenses or Expenses paid in advance .Prepaid expenses, unexpired expenses, or expenses paid in advance refer to expenses that have been paid for in advance but have not yet been incurred by the endof the accounting period. These expenses are initially recorded as assets on the balance sheet because they represent future economic benefits.3. Accrued Revenue or Revenue Receivable .Accrued revenue, also known as revenue receivable, refers to revenue that has been earned but not yet received by the end of the accounting period.This typically occurs when goods have been delivered or services have been performed, but the payment from the customer has not yet been received.4. Unearned Revenue or Revenue in advace .Unearned revenue, also known as revenue received in advance or deferred revenue, refers to cash received from customers for goods or services that have not yet beenprovided by the end of the accounting period. Essentially, it represents an obligation to deliver goods or services in the future.For example, if a magazine publisher receives payment for an annual subscription from a customer in December but hasn't yet delivered any magazines, the revenue isconsidered unearned until the magazines