CHP 10: ADJUSTMENT ENTRIES



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.

An adjusting entry can used for any type of accounting transaction; here are some of the more common ones:

10.1 Accrual




10.2 Pre-payment



How Prepaid Expenses Work | Adjusting Entries

10.3 Depreciation




What Is Depreciation - How It Affects Profit And Cash Flow



10.4 Bad Debts


Double entry for Bad Debts and Provision for Bad Debts


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