
Adjusting entries are journal entries recorded at the end of an accounting period to alter the ending balances in various general ledger accounts. These adjustments are made to more closely align the reported results and financial position of a business with the requirements of an accounting framework, such as GAAP or IFRS. This generally involves the matching of revenues to expenses under the matching principle, and so impacts reported revenue and expense levels.
The use of adjusting journal entries is a key part of the period closing processing, as noted in the accounting cycle, where a preliminary trial balance is converted into a final trial balance. It is usually not possible to create financial statements that are fully in compliance with accounting standards without the use of adjusting entries.
10.1 Accrual
10.2 Pre-payment
10.3 Depreciation
10.4 Bad Debts
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Adjusting entries
Recommended text/reading:
- Sangster, A., & Wood, F. (2019). Business accounting volume 2 (14th ed.). Pearson.
- Sangster, A., & Wood, F. (2018). Business accounting volume 1 (14th ed.). Pearson.
- Weagant, J.J., Kimmel, P.D., & Keiso, D.E. (2018). Accounting principles (12th ed.). Wiley. (for this ebook you need to join this channel >> accounting <<
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