IMPORTANCE OF ADJUSTMENT ENTRIES

Importance of Adjustment Entries

Jourdain M. Yardan

American Intercontinental University

IMPORTANCE OF ADJUSTMENT ENTRIES

ABSTRACT

Adjustment entries are made to handle issues that occur from events that directly affect expenses and revenue for accounting periods. The four types of accounting entries are accrued revenues, unearned revenues, accrued expenses, and prepaid expenses. Input forms for the journal entries that have supported information for each transaction are used to record information into a computerized accounting system. Ethical issues come up in the world of adjustment entries therefore the necessity to have approved entries.

Keywords: Adjustment Entries, Revenue, Transaction, Ethical, Accrued

IMPORTANCE OF ADJUSTMENT ENTRIES

Importance of Adjustment Entries

Adjustment journal entries are made to adjust account balances and events that

affect revenue and expenses for accounting periods. Since all transactions can be hard to annotate, adjustment entries are used to account for items that do not get recorded in daily transactions. There are multiple ways to complete adjustment entries such as hiring an accountant that will give you copies to enter into a general ledger or by simply completing it by yourself. Adjustment entries create complete and accurate account balances at the end of the accounting period. Since accounts constantly need to be upgraded the need for adjustment entries is high. An example of a mistake in an accounting system can be of posting incorrect amounts of money into accounts. We need adjustment entries to match revenues and expenses to the proper accounting period. (2009, Adjustment Entries)
Types of Adjustment