Adjusting Entries

Question: Adjusting entries are used to update the ledger for any financial changes that have occurred gradually

over time and not recorded through a regular journal entry. What kinds of adjustments are normally needed before

Don't use plagiarized sources. Get Your Custom Essay on
Adjusting Entries
Just from $13/Page
Order Essay

financial statements are prepared?

Answer: A variety of adjusting entries will be examined throughout the remainder of this textbook. One of

the accountant’s primary responsibilities is the careful study of all financial information to ensure that it is all

fairly presented before being released. Such investigation can lead to the preparation of numerous adjusting

entries. “Why Must Financial Information Be Adjusted Prior to the Production of Financial

Statements?”, only the following four general types of adjustments are introduced. In later chapters, many

additional examples will be described and analyzed.

• Accrued expenses (also referred to as accrued liabilities)

• Prepaid expenses

• Accrued revenue

• Unearned revenue (also referred to as deferred revenue)

Usually, at the start of the adjustment process, the accountant prepares an updated trial balance to provide a visual,

organized representation of all ledger account balances. This listing aids the accountant in spotting figures that

might need adjusting in order to be fairly presented.