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Although numerous adjustments are studied in this textbook, four general types are especially common: accrued expenses, prepaid expenses, accrued revenues, and unearned revenues. Any expense (such as salary) that grows gradually over time but has not yet been paid is known as an accrued expense.

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Adjusting entries are made at the end of the accounting period to make your financial statements more accurately reflect your income and expenses, usually ? but not always ? on an accrual basis. This can be at the end of the month or the end of the year.

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Here's an example of an adjusting entry: In August, you bill a customer $5,000 for services you performed. They pay you in September. In August, you record that money in accounts receivable?as income you're expecting to receive. Then, in September, you record the money as cash deposited in your bank account.

Adjustments entries fall under five categories: accrued revenues, accrued expenses, unearned revenues, prepaid expenses, and depreciation.

Account adjustments are entries made in the general journal at the end of an accounting period to bring account balances up-to-date. They are the result of internal events, which are events that occur within a business that don't involve an exchange of goods or services with another entity.

Examples of accounting adjustments are as follows:Altering the amount in a reserve account, such as the allowance for doubtful accounts or the inventory obsolescence reserve.Recognizing revenue that has not yet been billed.Deferring the recognition of revenue that has been billed but has not yet been earned.More items...?Jan 11, 2022

Adjusting entries are changes to journal entries you've already recorded. Specifically, they make sure that the numbers you have recorded match up to the correct accounting periods. Journal entries track how money moveshow it enters your business, leaves it, and moves between different accounts.