Professional Documents
Culture Documents
Some organizations prepare adjusting entries multiple times throughout the year, such as at the end
of each quarter.
ADJUSTING ENTRIES
refer to internal journal entries made to account for timing differences in the flow of
cash and the recognition of the accrual-basis revenue and expenses.
Accrued Revenues
Accrued Expenses
ADJUSTING
ENTRIES
Deferred Revenues Uncollectible Accounts
Prepaid Expenses Depreciation
Accruals:
Revenues or expenses that have not been recorded, and have not been received or
paid.
Deferrals:
Revenues or expenses that have been recorded but not yet earned or used.
Non-cash:
These adjusting entries record non-cash items such as depreciation expense, allowance
for doubtful debts etc.
An adjusted trial balance is prepared after adjusting entries are made and posted to the
ledger.
This is the second trial balance prepared in the accounting cycle. Its purpose is to test
the equality between debits and credits after adjusting entries are entered into the
books of the company.
It contains:
Provides information regarding the financial performance of the entity for the reporting period.
It reports:
Revenues
Expenses
Reports changes in capital stock and retained earnings account for the same period of time as
the income statement.
Closing entries, also called closing journal entries, are entries made at the end of an accounting
period to zero out all temporary accounts and transfer their balances to permanent accounts.
The post closing trial balance is a list of accounts or permanent accounts that still have balances
after the closing entries have been made.