Question

What Are Adjusting Entries?

Answer 1

Answer:

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Explanation:

In accounting/accountancy, adjusting entries are journal entries usually made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred

Answer 2

Answer:

Explanation:

Adjusting entries are journal entries usually made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred

Adjusting Entries are journal entries that are made at the end of the accounting period, to adjust expenses and revenues to the accounting period where they actually occurred

Generally speaking, they are adjustments based on reality, not on a source document.

This is in sharp contrast to entries during the accounting period (such as utility bills or fees for services rendered) that depend on source documents.

Types of Adjusting Entries

There are five basic types of adjusting entries:

• Accrued revenues (also called accrued assets) are revenues already earned but not yet paid or recorded.

• Unearned revenues (or deferred revenues) are revenues received in cash and recorded as liabilities prior to being earned.

• Accrued expenses (also called accrued liabilities) are expenses already incurred but not yet paid or recorded.

• Prepaid expenses (or deferred expenses) are expenses paid in cash and recorded as assets prior to being used.

• Other adjusting entries include depreciation of fixed assets, allowances for bad debts, and inventory adjustments.