adjusting-entires.docx - Adjusting entries are journal entries recorded at the end of an accounting period to alter the ending balances in various

adjusting-entires.docx - Adjusting entries are journal...

This preview shows page 1 - 2 out of 2 pages.

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: To record depreciation and amortization for the period To record an allowance for doubtful accounts To record a reserve for obsolete inventory To record a reserve for sales returns

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture