Adjusting Entries

Adjusting Entries

When accounting is presenting a financial Statement that includes journal entries, there

presenting adjusting entries. Adjusting entries is a statement to ensure the company financial

records by observing the revenue and recognition with matching principles. In addition adjusting

entries are single transaction that can affect revenue and expense with all transaction that been

document in a ending period of the month. (Sons, 2011) For instance, a company can have $1200

of debit balance in the account by the end of the month, a count of supplies on hands is about

$360 remaining. In addition supplies is worth $840 and the supplies has been used up, now the

supplies account requires a $840 adjustment so the assets are not overstated with the supplies

expense account requires $840 adjustment so the expense are not understated.

4 Types of Adjusting Entries

However, there are 4 types of adjusting entries; Accrued revenue, Unearned revenue, Accrued

expenses, and prepaid expense. In addition these are types of adjusting entries that are based

upon accounting cycle and prepaid trial balance, also included as well of adjusting entries is

depreciation and allowance. Although the first type of adjusting entries is accrued revenue that

also call accrued asset are basically revenue earn but not yet recorded or paid. The second type is

unearned revenue or which is known as deferred revenues are revenue that is receive by cash or

recorded for liability to prior of beginning earnings. Third type are accrued expense or preferred

as accrued liability, that is a expense incurred but not paid or recorded. The 4th types is prepaid

expense, this also call deferred expense, are expense that is paid by cash and recorded as asset

to prior beginning usage. However, there other adjusting entries such as depreciation and

allowance these entries are for bad debts and inventory adjustment.