Catherine Rose V.

Alferez
XI-Mt. Makiling

What are the adjusting 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.

When are adjusting entries prepared?

An adjusting journal entry is typically made just prior to issuing a company's

financial statements. To demonstrate the need for an accounting adjusting
entry let's assume that a company borrowed money from its bank
on December 1, 2018 and that the company's accounting
period ends on December 31.

Why are adjusting entries prepared?

The purpose of adjusting entries is to adjust revenues and expenses to

the accounting period in which they occurred. After the entries are made in
the accounting journals, they are posted to the general ledger in the same
way as any other accounting journal entry.

What are the accounts that need to be adjusted?

There are four types of accounts that will need to be adjusted. They are
accrued revenues, accrued expenses, deferred revenues and
deferredexpenses. Accrued revenues are money earned in one
accounting period but not received until another.